Suppose Fastest Company is offered accounts payable terms of 2 percent, 10 days, net 30 days but

Question:

Suppose Fastest Company is offered accounts payable terms of "2 percent, 10 days, net 30 days" but its suppliers actually allow it to repay in 45 days. Estimate the annualized opportunity cost for not taking advantage of the 2 percent discount for the quick 10-day payment.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...