Silver Cup Berhad's current credit term to its suppliers is 2/15 net 60. If the company...
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Silver Cup Berhad's current credit term to its suppliers is 2/15 net 60. If the company wishes to take the cash discount, the company would need to borrow RM500,000 to support its extended operating cycle. Therefore, the financing alternatives that are offered to the company are as follow: 1) Alternatives 1 Bank Satu offers an 8% per annum simple interest, 2-month loan with 20% compensating balance. 2) Alternatives 2 Bank Dua offers a line of credit of RM600,000 for 2 months with an interest of 12%. Any unused amount will be subjected to a commitment fee of 2%. x a. Discuss which financing option Silver Cup Berhad should choose (support your answer with calculation) Silver Cup Berhad's current credit term to its suppliers is 2/15 net 60. If the company wishes to take the cash discount, the company would need to borrow RM500,000 to support its extended operating cycle. Therefore, the financing alternatives that are offered to the company are as follow: 1) Alternatives 1 Bank Satu offers an 8% per annum simple interest, 2-month loan with 20% compensating balance. 2) Alternatives 2 Bank Dua offers a line of credit of RM600,000 for 2 months with an interest of 12%. Any unused amount will be subjected to a commitment fee of 2%. x a. Discuss which financing option Silver Cup Berhad should choose (support your answer with calculation)
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Related Book For
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam
Posted Date:
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