Eddie Craft is offered credit terms of 2/10 net 40 by his suppliers. Eddie, however, usually pays in 30 days. He is now considering borrowing money from his bank in order to take advantage of the cash discount being offered. His bank is willing to lend him $20,000 for 180 days by way of a discounted loan with an interest. cost of $1,800. Required: Advise Eddie Craft on what he should do giving your reason.

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
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Eddie Craft is offered credit terms of 2/10 net 40 by his suppliers. Eddie,
however, usually pays in 30 days. He is now considering borrowing money
from his bank in order to take advantage of the cash discount being offered.
His bank is willing to lend him $20,000 for 180 days by way of a discounted
loan with an interest. cost of $1,800.
Required: Advise Eddie Craft on what he should do giving your reason.
Transcribed Image Text:Eddie Craft is offered credit terms of 2/10 net 40 by his suppliers. Eddie, however, usually pays in 30 days. He is now considering borrowing money from his bank in order to take advantage of the cash discount being offered. His bank is willing to lend him $20,000 for 180 days by way of a discounted loan with an interest. cost of $1,800. Required: Advise Eddie Craft on what he should do giving your reason.
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