Answered: A supermarket charges 2.75% per month…

A supermarket charges 2.75% per month on credit purchases. What is the equivalent nominal annual intere O a. 33% O b. 36% O c. 0.229% O d. 2.75%

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 8P: Captain Whitman Ship Supplies offers terms of 3/15, net 45. If a purchaser takes the discount and...

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Concept explainers

Trade Credit

Answer- a- Before Shipping of goods

Question

A supermarket charges 2.75% per month on credit purchases. What is the equivalent nominal annual interest rate?
a. 33%
O b. 36%
O c. 0.229%
O d. 2.75%

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Captain Whitman Ship Supplies offers terms of 3/15, net 45. If a purchaser takes the discount and pays on the 10th day, what is the nominal cost of trade credit? Now suppose a purchaser actually pays on the 20th day but still takes the discount. What is the actual nominal cost of the trade credit?
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