Question

Peter buys consignment of doll houses worth $30 000. Shop offers terms of 2/10 net 60....

Peter buys consignment of doll houses worth $30 000. Shop offers terms of 2/10 net 60. How much can he borrow from his bank overdraft at 16% interest if there is 365 days in a year take the discount or not.

Take Discount as cost of discount is 12%

Take discount as cost of discount is 15%

Do not take the discount as cost of discount is 12%

Do not take the discount as cost of discount is 15%

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Answer #1

Based on the given data, the effective rate of interest can be calculated using the given discount terms;

The effective rate of interest by using discount is coming to 15%, and is lower than that of the bank overdraft;

Hence, the answer is: Take discount as cost of discount is 15%

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