A firm buys on terms of 3/15,net 45.It does not take the discount,and it generally pays after 85 days.What is the nominal annual percentage cost of its non-free trade credit,based on a 365-day year?
A) 17.58%
B) 15.00%
C) 18.55%
D) 16.13%
E) 13.22%

Question

Quizplus · Accepted Answer

11ea856c_8b55_f59b_9aec_f950a36b33f6_TB1222_00 ?
Nom.% cost = Disc %/(100 - Disc %) 11ea856c_8b56_1cac_9aec_4d06b796a787_TB1222_00 (365/(Actual days - Disc days))
Nom.% cost = 3.09% 11ea856c_8b56_1cad_9aec_e1fca5c57671_TB1222_00 5.21 = 16.13%
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The effective discount % is earned N times per year;the product is the nominal annual cost rate.
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A Firm Buys on Terms of 3/15,net 45