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Brown Company is short on cash and is attempting to determine whether it would be advantageous to forgo the discount on this months purchases or to borrow funds to take advantage of the discount. The discount terms are 2/10, net 45.

A. What is the maximum annual interest rate that Brown Company should pay on borrowed funds? Why?

B. What are some of the intangible disadvantages associated with forgoing the discount?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92094903

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