Discuss the trade discount terms

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Reference no: EM131519220

Question: Feast'N'Run provides a contract catering service to several university and college campuses. One of its main suppliers has offered trade discount terms of 1/10 net 40. In the past, Feast'N'Run has taken an average of 50 days' credit when settling its trade accounts. The chief accountant feels that this policy has not damaged relations with any of its suppliers and proposes to continue with it, except when making an early payment to secure a discount. Feast'N'Run finances its investment in working capital by short-term borrowing that carries an annual interest rate of 9.5%.

Reference no: EM131519220

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