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| The Duoplan Company is determining the most appropriate source of short-term funding. Trade credit terms from suppliers are 2/30,n/90.The rate for borrowing at the bank is 12%. The company has also been approached by an investment banker offering to issue Duoplan’s commercial paper. The commercial paper would be issued quarterly in increments of $9.1 million with net proceeds of $8.8million. Which option should the firm select? A. The trade discount, because it provides the lowest cost of funds. B. Bank borrowing, because it provides the lowest cost of funds. C. Commercial paper, because it provides the lowest cost of funds. D. The costs are so similar that the decision is a matter of convenience. |