ADMS 4541 Lecture Notes - Lecture 5: Agency Cost, Cash Conversion Cycle, Japanese Yen
15 Apr 2018
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** do the eoq problems on the moodle. Mid-term will have 1 question from eoq problems. Questions will appear lecture slides and the textbook. If not atleast bring another photo id with your name. Do not write any theory in there. The largest source of short term financing for a firm. Usually 30 to 60 days grace period before bill is due. A cash discount is often given if payment is made within a specified time. The firm s facing a choice between. Paying the bill on the 10th day butt incurring direct cost of borrowing funds elsewhere or the opportunity cost if using it"s own money. Pay the bill on the 30th day by forgoing the cash discount. Because you can utilize the money better. Cost of the second alternative - cost of forgoing the disocount = Therefore it should be the first alternative. Because you can probably get a loan much lower than 37. 24%
