Brent Ltd purchases raw materials from the usual supplier under the terms of 2/10 net 30. The financial manager has estimated that they can delay payment to this supplier by thirteen days without any penalty. This will however, result in the loss of the settlement discount. The company pays interest on its overdraft account at a rate of 18% per year. Assume one year equals 365 days.

Required: Ascertain with calculations whether it would be beneficial for management to settle the debt earlier and benefit from the settlement discount or not.

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