Q26. Douglas Industries purchases supplies costing $3,500.00 with credit terms o

Question

Q26. Douglas Industries purchases supplies costing $3,500.00 with credit terms of 2/10, N/45. Douglas does not have the funds to pay within 10 days and explores the possibility of borrowing the necessary amount to take advantage of the discount. The local bank is willing to lend Douglas the money at 9% for 45 days at ordinary interest. The savings or loss if Douglas borrows the money to take advantage of the discount is:
   a. $31.16 loss
   b. $18.22 savings
   c. $18.22 loss
   d. $31.16 savings
   e. none of the above

Explanation / Answer

e. none of the above

correct answer is: 38.59

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