Tivo Corporation purchases its raw materials on credit with terms of 3/10, net 30. What is the annual percentage rate (APR) of non-free trade credit if Tivo does not take the discount and pays on Day 30. In your computations, assume there are 360 days in a year.

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The discount is 3%, and the payment period is 20 days (30-10). The formula for APR is: [(Discount % / (100% - Discount %)) * (360 / (Full allowed payment days - Discount days))]. Plugging in the values: [(3 / 97) * (360 / 20)] = 55.67%.

Tivo Corporation Purchases Its Raw Materials on Credit with Terms