ZuoTi.Pro
Question

A firm buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 58 days


A firm buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 58 days. What is the effective annual percentage cost of its non-free trade credit? (Use a 365-day year.) 

image.png

business   finance   
1 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

✔ Recommended Answer
Answer #1

0 0
Add a comment
Answer #2
[REMOVED]
0 0
Add a comment
Answer #3

effective annual percentage cost = (1 + 2%/(1-2%)) ^ 365 / (58 -8)- 1 = 15.89%

answered by: anonymous
0 0
Add a comment
Know the answer?
Add Answer to:
A firm buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 58 days
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A firm buys on terms of 2/8, net 45 days, it does not take discounts, and...

    A firm buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 85 days. What is the effective annual percentage cost of its non-free trade credit? (Use a 365-day year.) a. 10.55% b. 10.05% c. 8.64% d. 9.55% e. 7.84%

  • Show in Excel please! A firm buys on terms of 2/8, net 45 days, it does...

    Show in Excel please! A firm buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 58 days. What is the effective annual percentage cost of its non-free trade credit? (Use a 365-day year.) Terms of trade 2/8, net 45 discount% discount days days of credit Nominal cost of trade credit Days of costly credit Effective cost of trade credit

  • Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and...

    Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and it generally pays after 70 days. What is the effective (not nominal) annual percentage cost of its non-free trade credit, based on a 365-day year? Enter your answer rounded to two decimal places.

  • Newsome Inc. buys on terms of 3/15, net 45. It does not take the discount, and...

    Newsome Inc. buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 60 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

  • Cash Poor, Inc. (CPI) buys on terms of 2/10, net 45. CPI does not take the...

    Cash Poor, Inc. (CPI) buys on terms of 2/10, net 45. CPI does not take the discount, and it generally pays after 55 days. What is the nominal annual percentage cost of its non–free trade credit, based on a 365–day year? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

  • Cash Poor, Inc. (CPI) buys on terms of 2/10, net 45. CPI does not take the...

    Cash Poor, Inc. (CPI) buys on terms of 2/10, net 45. CPI does not take the discount, and it generally pays after 50 days. What is the nominal annual percentage cost of its non–free trade credit, based on a 365–day year? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

  • Perpetually Slow Pay, Inc. buys on terms of 3/15, net 45. It does not take the...

    Perpetually Slow Pay, Inc. buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 75 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

  • Atlanta Cement, Inc. buys on terms of 2/15, net 30.

    Atlanta Cement, Inc. buys on terms of 2/15, net 30. It does not take discounts, and it typically pays 115 days after the invoice date. Net purchases amount to $720,000per year. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

  • Suppose the credit terms offered to your firm by its suppliers are 2/10, net 30 days....

    Suppose the credit terms offered to your firm by its suppliers are 2/10, net 30 days. Your firm is not taking discounts, but is paying after 22 days instead of Day 30. You point out that the nominal cost of not taking the discount and paying on Day 30 is approximately 37%. But since your firm is neither taking discounts nor paying on the due date, what is the effective annual percentage cost (not the nominal cost) of its costly...

  • Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 55;...

    Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 55; and it currently pays on the 5th day and takes discounts. Lancaster plans to expand, which will require additional financing. Assume 365 days in year for your calculations. If Lancaster decides to forgo discounts, how much additional credit could it obtain? Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest cent. $___ What...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT