What is the opportunity cost of not taking the cash discount

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Reference no: EM131501142

Falcon Co. purchased $ 960,000 of raw materials from its supplier under the credit terms of 1/15, net 60. Assuming that Falcon Co. takes advantage of the cash discount by paying on day 15 and a 360-day year

a) What is Falcon Co's average monthly accounts payable (creditors) balance? Assume that the current accounts payable is at gross value (no discount taken)

b) If Falcon Co decides to forego the early discount and extend payment until the end of the credit period, what would be its accounts payable balance?

c) What is the opportunity cost of not taking the cash discount?

Reference no: EM131501142

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