A company is bidding to buy a fleet of lorries for £ 15,600,000. Payment on delivery 1,000,000 TL in advance is realized as 1,297,200 TL for each subsequent month. Another seller makes the same delivery by applying 1% interest per month to the outstanding amount he suggests. Which offer is more advantageous?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 23P
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A company is bidding to buy a fleet of lorries for £ 15,600,000. Payment on delivery 1,000,000 TL in advance is realized as 1,297,200 TL for each subsequent month. Another seller makes the same delivery by applying 1% interest per month to the outstanding amount he suggests. Which offer is more advantageous?

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