Question: Crazy Cliffs Computers (CCC) purchases computer parts from its suppliers 1/15, net 30. However, to take advantage of the discount CCC needs to get a

  1. Crazy Cliffs Computers (CCC) purchases computer parts from its suppliers 1/15, net 30. However, to take advantage of the discount CCC needs to get a bank loan. The bank charges 8% interest (APR) and a one percent origination fee for the loan (assume the loan is for 1 year and is renewed yearly). What is the effective annual cost of not taking the trade discount? What is the effective cost of the bank loan? Should CCC take out the bank loan to take advantage of the trade credit?

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