Should the business borrow money to make payment within the discount period?
D&B Grocers recently made a large purchase of merchandise inventory on account with credit terms of 5/10, n/30. D&B does not have the cash flow to pay the invoice within the discount period but will have the necessary funds to make payment by the invoice due date. The grocer is considering borrowing money on its line of credit in order to take advantage of the 5% discount. Should D&B borrow the money to make payment within the discount period?
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