2. The two suppliers in question offer different prices and different payment windows for the same part. We need to put the two options into the same terms by performing a price analysis.

• Supplier A: $100/unit, payment due in 90 days
• Supplier B: $105.50/unit, payment due in 30 days
• Number of days earlier Supplier A must be paid than Supplier B (longest days to pay shortest days to pay)
• Number of days earlier Supplier A must be paid than Supplier B =

Daily cost of capital assuming a 20% annual cost of capital.

• Cost of Capital/days in a year =

• Opportunity cost = # of days * daily cost of capital * purchase price of A
  • Opportunity cost =
• Effective price for Supplier A (in like terms as B)
• Supplier A cost + opportunity cost =

Describe the result?