Langley Clinics, Inc buys $400,000 in medical supplies each year (at g

QUESTION

Langley Clinics, Inc buys $400,000 in medical supplies each year (at gross prices) from its major suppliers, consolidated services, which offers Langley terms of 2.5/10, net 45. Currently, Langley is paying the supplier the full amount due on day 45 but it is considering taking the discount paying o¦
2.5/10 Net 45 means a disc of 2.5% if paid within 10 days else make full payment within 45 days So if a cust doesnt take discount, he gets free credit for 45-10= 35 days You are getting a 2.5% discount on a 35-day¦

e in payments. There are (360/35) = 10.29 35-day periods in a year. Your EAR is 10.29 x 2.5% = 25.73% per year. Trade credit is 2.5%*400000 = 10000

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION