Cash Discount – Sam Parker is offered credit terms of 2/10 net

Cash Discount – Sam Parker is offered credit terms of 2/10 net 45 by most of its suppliers

Subject: Business / General Business
Question

Sam Parker is offered credit terms of 2/10 net 45 by most of its suppliers but frequently does not have the cash available to take the discount. The firm has a credit line available at a local bank at an interest rate of 12 percent. The firm should:

1) give up the discount and financing the purchase with the line of credit.

2) take the cash discount and pay on the 45thday after the date of sale

3) take the cash discount and pay on the first day of the cash discount period

4) take the cash discount and financing the purchase with the line of credit

Explain please your answer