Simple Interest Question

[HarryM]

Hey guys,
I got this question and i'm not sure what to do for it, any help would be great

A retailer pays monthly for goods received from a wholesaler. Depending on the payment date, the wholesaler offers the following discounts:

Payment date (day of month) Discount (%)
5 .65
10 .55
15 .45
20 .30
25 .20

Which payment option should the retailer choose if the interest rate on a commercial loan is 8%?

Any help would be really appreciated, cheers

 

[HarryM]

Ok

So I calculated, as you did for all of them and found that the highest retailer advantage was the 25 day and 2% discount

But how can this be? Wouldn't paying of a commercial loan be best if you get all other payments done first i.e. in the first 5 days

I dont understand the logic

any help would be appreciated