Chapter 16.1, Problem 16.2RQ

Summary Introduction

To discuss: Whether the cost is associated with taking an early payment discount and even whether there is any cost related with providing a discount.  The ways in which the borrowing cost affects decisions to forego an early payment discount.

Introduction:

An external type of financing that have a shorter time span for repaying the loan back is termed as short-term financing. This type of financing has less interest rate as compared to the long-term financing. Every company relies on short-term financing from external sources.