Simple? Simon's Bakery purchases supplies on terms of 1.0/10, net 25. If Simple? Simon's chooses to take the discount? offered, it must obtain a bank loan to meet its? short-term financing needs. A local bank has quoted Simple? Simon's owner an interest rate of 12.0% on borrowed funds. Should Simple? Simon's enter the loan agreement with the bank and begin taking the? discount?? (Use 365 days for a? year.)
Simple? Simon's can earn an effective rate of ____%. (Round to one decimal place)
Should Simple? Simon's enter the loan agreement with the bank and begin taking the? discount? (Select the best choice? below.)
A. Simple? Simon's will earn 27.7% on its purchases by paying within the discount period and should enter into the loan agreement.
B. Simple? Simon's will earn 15.8% on its purchases by paying within the discount period and should enter into the loan agreement.
C. The discount rate of 1.0% is considerably lower than the 12.0% interest? rate, so Simple? Simon's should not enter into the loan agreement.
D. Need more information to answer the question.