Financial Management (Sources of short- term financing)

Q.1 

Compute the cost of not taking the following cash discounts:

a.  2/10, net 40.

b.  2/15, net 30.

c.  2/10, net 45

d.  3/10, net 90

Q.2

Regis Clothiers can borrow from its bank at 17 percent to take cash discount. The terms of the cash discount are 3/19, net 45. Should the firm borrow the funds?

Q.3

Simmons Corp. can borrow from its bank at 17 percent to take a cash discount. The terms of the cash discount are 1.5/10, net 45. Should the firm borrow the funds?