Description
REQUIRED
Study the information provided below and determine whether Neston Traders should borrow the cash to settle
the account. Motivate your answer by calculating the cost of forfeiting the discount (expressed as a
percentage to two decimal places).
(5 marks)
INFORMATION
Neston Traders purchased inventory on credit for R30 000. The supplier offered Neston Traders the option
to settle the account by paying R28 800 up to 10 days after the sale or pay R30 000 by the end of 60 days.
Neston Traders can borrow cash from its bank at a rate of 18 percent per annum to settle the account within
10 days.
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