2B5G DEXTER PRODUCTS RECEIVES $25,000 WORTH OF MERCHANDISE FROM ITS M...

144.

CSO: 2B5b

LOS: 2B5g

Dexter Products receives $25,000 worth of merchandise from its major supplier on the

15th and 30th of each month. The goods are sold on terms of 1/15, net 45, and Dexter

has been paying on the net due date and foregoing the discount. A local bank offered

Dexter a loan at an interest rate of 10%. What will be the net annual savings to Dexter if

it borrows from the bank and utilizes the funds to take advantage of the trade discount?

a.

$525.

b.

$1,050.

c.

$1,575.

d.

$2,250.