Problem 17.04 – Inventory Payment and Discount Analysis

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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Difficulty – Medium

Given the number of units of inventory, the price of each, and the supplier terms, determine how long you have to pay before the account is overdue and how much should you remit if you take the full period. What is the discount being offered? How quickly must you pay to get the discount? If you do take the discount, how much should you remit? If you don't take the discount, how much interest are you paying implicitly? How many days' credit are you receiving?

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