Both Montreal Ltd. and Quebec Inc. produce a subcomponent that you incorporate into your primary product. Montreal has indicated that, for large volume orders in excess of 5,000 units, it is willing to offer you a 2.5% discount off its list wholesale price of $21.50 per unit, but that at this price, it cannot offer credit terms (that is, all purchases must be for cash). On the other hand, Quebec Inc. is willing to sell you any quantity of the subcomponent at $21.25 per unit, and will offer credit terms of 1/10, net 45. Both suppliers have indicated that they can meet your needs of 15,000 units of the subcomponent per month.

Question

Which supplier would you prefer to make your purchases from, assuming that you can borrow fromyour bank at a stated interest rate of 12%? Explain and show all calculations

Answer rating: 100% (QA)

To determine which supplier to choose we need to compare the total cost of purchasing 15000 units fr... View the full answer