Take advantage of the cash discount offer

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1. A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within ten days; otherwise, the bill is due at the end of 60 days. Would you recommend borrowing from a bank at an 18 percent annual interest rate to take advantage of the cash discount offer? Explain your answer.

2. Callaghan Motors' bonds have 9 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 6.5%, and the yield to maturity is 13%. What is the bond's current market price? Round your answer to the nearest cent.

Reference no: EM131982067

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