Calculate the annual percentage cost of not taking advantage of a cash discount if a supplier...
Calculate the annual percentage cost of not taking advantage of a cash discount if a supplier provides payment terms of 3%/5, net 40 cash discount.
Homework Answers
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annual percentage cost of not taking advantage of cash discount |
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=percentage discount / 100% - percentage discount x 365 / days between early payment and normal due date |
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= 3 / 100-3 x 365 / 40 – 5 |
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= 3 / 97 x 365 / 35 |
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= 0.03092 x 10.4285 |
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= 0.3224 x 100 = 32.24% |
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