Bulldog Inc. recently made a $75,000 purchase from a vendor. The vendor will accept payment by check
Fantastic news! We've Found the answer you've been seeking!
Question:
The assistant treasurer of Bulldog Inc. notes that payment by check will provide an additional 3 days of float (beyond the 30 days of trade credit), relative to payment by ACH (assume an additional one day of float beyond the trade credit period).?
In an effort to encourage Bulldog Inc. to pay via ACH, the vendor has offered a 0.50% discount for ACH payments. Assuming a discount rate of 5%, which disbursement approach should Bulldog Inc. use?
Ignore the transactions cost associated with the check and ACH entry.?
Related Book For
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin
Posted Date: