Carnation needs to buy a $12,500 part the part company is offering cash discount terms of 4/10, n30. Carnation has a tight cash flow, wants to discount a 180 day note dated February 12 with a maturity value of $10,300. Bank offers a discount rate of 6%. Should carnation discount the note today, July 20, in order to get money needed for the cash discount? what is the amount of savings or loss?

To determine whether Carnation should discount the note today in order to get the money needed for the cash discount, we need to compare the savings from discounting the note with the amount needed for the cash discount.

First, let's calculate the discount amount on the cash discount terms offered by the part company.

Cash discount: 4/10, n30 means that if Carnation pays within 10 days, they can take a 4% discount. Otherwise, the full amount is due within 30 days.

Discount amount = $12,500 * 4% = $500

Next, let's calculate the discount amount for the 180-day note.

Maturity value of the note = $10,300
Discount rate = 6%
Discount period (time from the note's issuance to discounting date):
- From February 12 to July 20 = 158 days

Using the discount rate and the discount period, we can calculate the discount amount:

Discount amount = Maturity value * Discount rate * (Discount period / 360)
Discount amount = $10,300 * 6% * (158 / 360)
Discount amount = $270.67 (approx.)

Now, let's compare the savings from discounting the note with the amount needed for the cash discount:

Savings from discounting the note = Discount amount on the note - Cash discount amount
Savings = $270.67 - $500
Savings = -$229.33 (approx.)

Based on the calculation, discounting the note today would result in a loss of approximately $229.33. Therefore, Carnation should not discount the note to get the money needed for the cash discount.