1. You work for Brigham Company, which is deciding between three alternative suppliers who are offering virtually identical products at the same price. They differ in their credit terms as follows.

 

Supplier	Credit Terms
A	2/20 net 40
B	1/10 net 30
C	3/10 net 55

 

1. Calculate the cost of foregoing the cash discount offered by each supplier.                             

 

 

 

 

 

 

 

 

 

1. Which supplier should you select? You must justify your answer.                                               

 

 

 

1. XYZ Company provides you with the following information:                                                  
   • Inventory 8 turnover is times per year. 
   • ACP is 35 days 
   • APP is 20 days. 
   • Investment in the operating cycle is $5 million per year.

 

1. Calculate XYZ's daily cash operating expenditure.
2. The financing required to support its CCC 
3. The annual cost of its investment if it has to pay 10% to finance the CCC. 

Answer rating: 100% (QA)

To calculate the cost of foregoing the cash discount offered by each supplier we need to first under... View the full answer