9. Simple Simon's Bakery purchases supplies on terms of 1/10, Net 25. 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 12% on borrowed funds and no origination fees. Should Simple Simon's enter the loan agreement with the bank in order to begin taking the discount? Yes, because the bank loan is cheaper than their trade credit No, because 12% isn't a high enough return for Simple Simon's Yes, because the trade credit is cheaper No, because the bank loan is more expensive than their trade credit
9. Simple Simon's Bakery purchases supplies on terms of 1/10, Net 25. 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 12% on borrowed funds and no origination fees. Should Simple Simon's enter the loan agreement with the bank in order to begin taking the discount? Yes, because the bank loan is cheaper than their trade credit No, because 12% isn't a high enough return for Simple Simon's Yes, because the trade credit is cheaper No, because the bank loan is more expensive than their trade credit
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
Section: Chapter Questions
Problem 1PS
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Please show all equations and work as needed. If possible, please type the work so that it may be copied and pasted. Thank you.
Transcribed Image Text:9.
Simple Simon's Bakery purchases supplies on
terms of 1/10, Net 25. 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 12% on borrowed funds
and no origination fees. Should Simple Simon's
enter the loan agreement with the bank in order
to begin taking the discount?
Yes, because the bank loan is cheaper than
their trade credit
No, because 12% isn't a high enough return
for Simple Simon's
Yes, because the trade credit is cheaper
No, because the bank loan is more
expensive than their trade credit
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