deciding whether or not to take a trade discount, the cost of borrowing from a bank or other source should be compared to the cost of trade credit to determine if the cash discount should be taken.

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When deciding whether to take a trade discount, it is important to compare the cost of borrowing money from a bank or other source to the cost of trade credit (the cost of not taking the discount and paying the full invoice amount). This comparison will help determine if the cash discount is worth taking or if it is more cost-effective to borrow money to pay the invoice.

Deciding Whether or Not to Take a Trade Discount, the Cost