Olumide Limited has made the decision to forgo the chance of receiving a cash discount of
2.5% in exchange for shortening its average payment period from 80 days to 40 days.
What would be the implied annual cost in terms of interest?
A.
B.
C.
D.
B. 5.13%
22.26%
23.40%
26.20%
Which ONE among the following is a disadvantage of using Debenture as a long-term
financing option?
A. The legal responsibility to pay both interest and principal amounts.
B. It raises the firm's financial leverage.
C. Failure to repay at maturity can result in forced liquidation.
D. Restrictive covenants may be imposed.
E. It is more costly for the firm compared to equity financing.