4. You run an upscale, fashionable, boutique for pet lovers in Beverly Hills. You need to replenish your inventory with

4. You run an upscale, fashionable, boutique for pet lovers in Beverly Hills. You need to replenish your inventory with

4. You run an upscale, fashionable, boutique for pet lovers in Beverly Hills. You need to replenish your inventory with 100 Gucci-brand, jewel encrusted, fleece lined, snakeskin collars for pet iguanas. Your customers have been very late in paying you and therefore your cash flow situation is not very good right now. Basically, you are barely getting by. Your vendor offers the following terms for your inventory purchase: 2/7 net 40. (A) Explain what 2/7 net 40 means. (B) Calculate the interest rate implied by these terms if you do NOT take advantage of the early pay discount and were going to avail yourself of vendor financing. Calculate your answer to 2 decimal places. (C) If you didnt have the cash to pay early and take the discount but you could take a cash advance from your credit card at 16.9% APR, should you take the temporary cash advance so that you could take the vendor discount? Explain what you should do and why. Assume a 360-day year. You must show your calculations to receive credit.


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