Question: Supplier Sam Problem 2 . Each year you buy $ 5 0 , 0 0 0 of goods from Supplier Sam. He normally lets you

Supplier Sam
Problem 2. Each year you buy $50,000 of goods from Supplier Sam. He normally lets you take 120 days to pay him. Recently, he's offered you terms of 2/10 net 120, meaning that you'll get a 2% discount if you pay within 10 days. Your risk-adjusted cost of capital is 5%. What is the present value of each alternative? Do you take the discount??

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