Simple​ Simon's Bakery purchases supplies on terms of 1.5/10, net 30. If Simple​ Simon's chooses to take the discount​ offered, it must obtain a bank loan to meet its​ short-term financing needs. A local bank has quoted Simple​ Simon's owner an interest rate of 10.9% on borrowed funds. Should Simple​ Simon's enter the loan agreement with the bank and begin taking the​ discount? (Hint: Use 365 days for a​ year.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Simple​ Simon's Bakery purchases supplies on terms of

1.5/10, net 30.

If Simple​ Simon's chooses to take the discount​ offered, it must obtain a bank loan to meet its​ short-term financing needs. A local bank has quoted Simple​ Simon's owner an interest rate of

10.9%

on borrowed funds. Should Simple​ Simon's enter the loan agreement with the bank and begin taking the​ discount? (Hint: Use 365 days for a​ year.)

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