Match the annual percentage rate to each of these trade credit terms:
__ 1/5, NET 60 a. 12.29%
__ 1.5/10, NET 60 b. 10.11%
__ 1/15, NET 45 c. 11.12%
__ 1/10, NET 60 d. 6.70%
__ 1.5/5, NET 60 e. 7.37%
Cost of credit = (Discount %/(1-Discount %)) * 365/(Days taken-Discount period)
1:d
cost = 1%/99% * 365/(60-5) =6.7%
2: c
Cost = 1.5%/98.5% * 365/ (60-10) = 11.12%
3: a
Cost =1%/99%* 365/(45-15) = 12.29%
4: e
Cost = 1%/99% * 365/(60-10) = 7.37%
5: b
Cost = 1.5%/98.5%* 365/(60-5) = 10.11%
Match the annual percentage rate to each of these trade credit terms: __ 1/5, NET 60...
What is the annual cost of trade credit when the terms are 1/10, net 30? Assume a year has 360 days. a. 12.1% (rounded) b. 12.3% (rounded) c. 18.2% (rounded) d. 18.4% (rounded)
Calculate the nominal annual cost of trade credit under each of the following terms. Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. 1/15, net 30. % 2/10, net 55. % 3/10, net 50. % 2/10, net 50. % 2/15, net 40. %
The annual cost of trade credit assuming a 365-day year for terms 3/10 net 40 is closest to: A. 43.3% B. 44.9%. C. 32.0% D. 27.8%
Assume the trade credit terms offered to your firm by your suppliers are 3/5, Net 30. Calculate the cost of the trade credit (effective annual rate) from day 5 until day 30 when you paid. 25.37% 55.94% 29.30% 21.61%
Your supplier offers terms of 1.2/10, Net 45. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 45?
A firm offers terms of 1.4/10, net 60. a. What effective annual interest rate does the firm earn when a customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What effective annual interest rate does the firm earn if the terms are changed to 2.4/10, net 60, and the customer does not take the discount? (Use 365 days...
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?
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%
Calculate the annualized cost of the trade credit terms of 1/15, net 30 when payment is made on the net due date (assume a 365-day year).
A large retailer obtains merchandise under the credit terms of 1/10, net 45, but routinely takes 60 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume 365 days in year for your calculations. Do not round intermediate calculations.