Your firm purchases goods from its supplier on terms of 2/10, Net 45. What is the...
Your firm purchases goods from its supplier on terms of 2/10, Net 45. What is the effective annual cost to your firm if it chooses not to take advantage of the trade discount offered?
Homework Answers
The firm will pay either 98 on or before 10 days or 100 with in 45 days. The difference in days 45-10=35days.
Effective annual cost = (100/98)^(365/35)-1 = 23.45 %
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