Your raw material supplier has been accepting payments on 30 day terms with no interest penalty. Recently,

Question:

Your raw material supplier has been accepting payments on 30 day terms with no interest penalty. Recently, you received an invoice which stated that the supplier would offer terms of 1/10, net 30. You have a with your bank at an EAR of 14.5% per year on outstanding loans. Should you accept the discount offer? Please explain why or why not.

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...