$1\mathrm{.}1$

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 $(expressedasa$

percentage $to$ two decimal places$).$

$(5$ marks$)$

INFORMATION

Neston Traders purchased inventory $on$ credit for $R30000.$ The supplier offered Neston Traders the option

$to$ settle the account $by$ paying $R28800upto10$ days after the sale $or$ pay $R30000by$ the end $of60$ days.

Neston Traders can borrow cash from its bank $at$ a rate $of18$ percent per annum $to$ settle the account within

$10$ days.