Question 17Zoro Inc. purchased a new machine on October 20, 2010 for $1,000,000 on credit. The supplier has offered Zoro terms of 2/10, n/45. Zoro’s bank is currently lending funds at 8 percent. Compute the approximate annual rate of interest underlying these credit terms (2/10, n/45). Use a 365-day year on any calculations and round only your answer to the nearest percent plus two more decimal places. Do not round any other amounts in your calculations.A. 2.00%B. 8.11%C. 10.43%D. 16.22%E. 20.86% Question 18Zoro Inc. purchased a new machine on October 20, 2010 for $1,000,000 on credit. The supplier has offered Zoro terms of 2/10, n/45. Zoro’s bank is currently lending funds at 8 percent. Should Zoro should take advantage of the cash discount.A. Yes, because you should always pay all invoices within the discount period.B. No, because you should never pay invoices within the discount period.C. No, because the discount rate (2%) is less than our cost-of-capital (8%)D. No, because the approximate annual rate earned by paying this invoice early exceeds our cost-of-capital (8%)E. Yes, because the approximate annual rate earned by paying this invoice early exceeds our cost-of-capital (8%)
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