The d j masson corporation needs to raise 500000 for 1 year, Ask an Expert

Management Studies

The D. J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new store. Masson buys from its suppliers on terms of 3/10, net 90, and it currently pays on the 10th day and takes discounts, but it could forgo discounts, pay on the 90th day, and get the needed $500,000 in the form of costly trade credit.

Alternatively, Masson could borrow from its bank on a 12 percent discount interest rate basis. What is the effective annual interest rate of the lower cost source?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92177851

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