Mike Supply LTD. Purchased $100,000 monthly on an account. The credit terms are 2 / 10 N 40. His accountant has informed the CEO that the company does not have sufficient funds to pay the accounts payable of $100,000 within 10 days, but the bank will give the company a line of credit at an annual interest cost of 12% 

Required: 

a. Calculated the cost of not taking the purchase discount. 

b. Calculated the effective annual cost of not taking the purchase discount.

Answer rating: 100% (QA)

A E K L 1 2 a Here 210 N 40 means if you pay with in the 1... View the full answer