Book Depot Inc. sells on terms of 3/10, net 60. What is the implicit cost of...
Book Depot Inc. sells on terms of 3/10, net 60. What is the implicit cost of trade credit under these terms? Use a 365-day year.
Homework Answers
IMPLICIT COST OF CREDIT = Discount %/(1-Discount %) x (365/(Full allowed payment days - Discount days))
IMPLICIT COST OF CREDIT = 0.03/(1-0.03) X (365/(60-10))
IMPLICIT COST OF CREDIT = (0.03/0.97) X (365/50) = 22.577%
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