A company has accounts payable of P5 million with terms of 2 % discount within 15 days,
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Question:
A company has accounts payable of P5 million with terms of 2 % discount within 15 days, net 30 days 2/15 net 30. It can borrow funds from a bank at an annual rate of 12 %, or it can wait until the 30th day when it will receive revenues to cover the payment. If it borrows funds on the last day of the discount period in order to obtain the discount, its total cost will be:
a. P 51,000 less
b. P100,000 less
c. P 24,500 more
d. P 75,500 less
Related Book For
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders , Marcia Cornett
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