ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year. 1. Simple annual effective cost of paying on 45th day instead of the 10th day 2. Compounded annual effective cost of paying on 45th day instead of the 10th day 3. Should ABC pay on the 10th day or 45th day?
ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year. 1. Simple annual effective cost of paying on 45th day instead of the 10th day 2. Compounded annual effective cost of paying on 45th day instead of the 10th day 3. Should ABC pay on the 10th day or 45th day?
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 32P
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ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year.
1. Simple annual effective cost of paying on 45th day instead of the 10th day
2. Compounded annual effective cost of paying on 45th day instead of the 10th day
3. Should ABC pay on the 10th day or 45th day?
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