EpsilonCo. needs $300,000 to take a cash discount of 2/10 net 70. A banker will lend...

Transcribed Image Text:

EpsilonCo. needs $300,000 to take a cash discount of 2/10 net 70. A banker will lend the money for 60 days at a cost of $5,500. a, What is the annual rate of interest for the bank loan? 2pts b. What is the cost of not taking the discount (as a rate of interest)? 2pts c. Based on the results of a & b above what should Epsilon do? Why? 2pts BONUS: If the bank would extend the same rate of interest for a loan for more than 60 days how many days would the payment need to be delayed to make the two options the same cost? 4pts EpsilonCo. needs $300,000 to take a cash discount of 2/10 net 70. A banker will lend the money for 60 days at a cost of $5,500. a, What is the annual rate of interest for the bank loan? 2pts b. What is the cost of not taking the discount (as a rate of interest)? 2pts c. Based on the results of a & b above what should Epsilon do? Why? 2pts BONUS: If the bank would extend the same rate of interest for a loan for more than 60 days how many days would the payment need to be delayed to make the two options the same cost? 4pts