You place an order for 480 units of inventory at a unit price of $195. The suppl

ID: 2713752 • Letter: Y

Question

You place an order for 480 units of inventory at a unit price of $195. The supplier offers terms of 1/12, net 30.

How long do you have to pay before the account is overdue?

If you take the full period, how much should you remit?

What is the discount being offered?

How quickly must you pay to get the discount?

If you do take the discount, how much should you remit?

If you don’t take the discount, how much interest are you paying implicitly?

How many days’ credit are you receiving?

You place an order for 480 units of inventory at a unit price of $195. The supplier offers terms of 1/12, net 30.

(a-1) 30 days

(a-2) 480 * $195

= $93,600

(b-1) 1%

(b-2) 12 days

(b-3) $93,600 * (1 - 1%)

= $92,664

(c-1) [2% / (1 -2%)] * [365 / (30 -12)]

= 41.38%

(c-2) 30 days - 12 days

= 18 days

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