Homework Answers
| 1) Present value of cost of both plans from Supplier X | |||
| Particulars | If payment is made within 10 days | If payment is made after 290 days | |
| Full Price | 2,200 | 2,200 | |
| Less: | Discount @5.7% | 125.4 | 0 |
| Payment made | 2074.6 | 2,200 | |
| Add: | Interest costs incurred (for 280 days) | 130.5 | 0 |
| Actual cost incurred | 2205.1 | 2200 | |
| 2) Present value of cost of both plans from Supplier Z | |||
| Particulars | If payment is made within 20 days | If payment is made after 290 days | |
| Full Price | 2,270 | 2,270 | |
| Less: | Discount @5.7% | 122.58 | 0 |
| Payment made | 2147.42 | 2,270 | |
| Add: | Interest costs incurred (for 265 days) | 127.85 | 0 |
| Actual cost incurred | 2275.27 | 2270 | |
3) As shown in the working of 1) and 2), the best plan would be to buy to goods from Supplier X and the payment shall be made after availing the credit period of 290 days.
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