Cash discount decisions Prairie Manufacturing has four possible suppliers, all of whom offer different credit terms. Except for the differences in credit terms, their products and services are virtually identical. The credit terms offered by these suppliers are shown in the following table.SupplierCredit termsJ1/10 net 30 EOMK2/20 net 80 EOML1/20 net 60 EOMM3/10 net 55 EOMa. Calculate the approximatecost of giving up the cash discount from each supplier.b. If the firm needs short-term funds, which are currently available from its commercial bank at 16%, and if each of the suppliers is viewed separately, which, if any, of the suppliers’ cash discounts should the firm give up? Explain why.c. What impact, if any, would the fact that the firm could stretch its accounts payable (net period only) by 30 days from supplier M have on your answer in part b relative to this supplier?
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