firm 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)25.09%
B)27.59%
C)30.35%
D)33.39%
E)36.73%

Question

Quizplus · Accepted Answer

The correct answer is A because the nominal annual percentage cost of non-free trade credit is calculated as (365 / (45 - 60)) * 3% = 25.09%.

Firm Buys on Terms of 3/15, Net 45