Simmons Corporation can borrow from its bank at 21 percent to take a cash discount. The terms of the cash discount are 2.5/18, net55.a. Compute the cost of not taking the cash discount.Note: Use a 360-day year. Do not round intermediate calculations. Input your final answer as a percent rounded to 2 decimalplaces.Cost of not taking a cash discountb. Should the firm borrow the funds?O NoO Yes%

Terms of cash discount = 2.5/18 net 55Discount rate = 2.5%Discount period (in days) = 18Final…

Answered: Simmons Corporation can borrow from its…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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