Biscuit Boys buys $9 million per year of materials (net of discounts) on terms of 2/20, net 60; and it currently pays on the 20th day and takes discounts. Biscuit plans to expand
Biscuit Boys buys $9 million per year of materials (net of discounts) on terms of 2/20, net 60; and it currently pays on the 20th day and takes discounts. Biscuit plans to expand, which will require additional financing. If Biscuit decides to forgo discounts, how much additional credit could it obtain, and what would be the nominal and effective cost of that credit? daily sales discount % Terms of trade 2/20, net 60 discount days days of credit Nominal cost of trade credit Days of costly credit Effective cost of trade credit
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