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) 10.05%
B) 10.55%
C) 7.84%
D) 8.64%
E) 9.55%

Question

Quizplus · Accepted Answer

11ea856c_8b57_ca64_9aec_c14fb97a5e3e_TB1222_00 ? EAR = [ 1 + Disc %/(100 - Disc %)] ^{[365/(Actual days - Disc.Period)]} - 1 = 10.05% ?

A Firm Buys on Terms of 2/8,net 45 Days,it Does