A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year) a. What is the effective annual cost of not taking this discount? b. How many days are there per period? c. How much is the rate per period?
A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year) a. What is the effective annual cost of not taking this discount? b. How many days are there per period? c. How much is the rate per period?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 8P: If a firm buys on terms of 3/15, net 45, but actually pays on the 20th day and still takes the...
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A firm is offered trade credit terms of 3/15, net 30
days. The firm does not take the discount, and it
pays after 50 days. (Assume a 365-day year)
a. What is the effective annual cost of not taking
this discount?
b. How many days are there per period?
c. How much is the rate per period?
d. The number of compounding period is_?
e. What is the annual nominal rate of not taking
this discount?
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