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One supplier has offered a discount to Box Co of 2% on an invoice for $7,500, if payment is made within one month, rather than the three months normally taken to pay. If Box’s overdraft rate is 10% pa, is it financially worthwhile for them to accept the discount and pay early?
The answer is given as $25 by borrowing $7500 for 2 months. Whereas I think if $7350 is to be paid and hence borrowed the benefit should be $27.5? Am I right?
One supplier has offered a discount to Box Co of 2% on an invoice for $7,500, if payment is made within one month, rather than the three months normally taken to pay. If Box’s overdraft rate is 10% pa, is it financially worthwhile for them to accept the discount and pay early?
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