Which of the following is correct a.Companies should always take the discount to pay suppliers earlier. b.If the firm can borrow below nominal cost of trade credit, is should take the discount and pay early c.If the cost of borrowing is lower than the effective cost of trade credit, the firm should take the discount and pay early d.If the cost of borrowing is higher than the nominal cost of trade credit, then the firm should take the discount and pay early e.Firms should always decline the discount to pay early and wait until last day of credit period to pay suppliers.

Trade credit depicts a substantial portion of credit mainly for short-term for most of the firms. It…

Answered: the effective cost of trade credit, the…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 6SCQ: Urban transit systems, especially those with rail systems, typically experience significant...

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Which of the following is correct

	a.	Companies should always take the discount to pay suppliers earlier.
	b.	If the firm can borrow below nominal cost of trade credit, is should take the discount and pay early
	c.	If the cost of borrowing is lower than the effective cost of trade credit, the firm should take the discount and pay early
	d.	If the cost of borrowing is higher than the nominal cost of trade credit, then the firm should take the discount and pay early
	e.	Firms should always decline the discount to pay early and wait until last day of credit period to pay suppliers.

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