Your firm purchases goods from its supplier with a discount period of 10 days,and a credit period of 40 days.If the effective annual cost of forgoing the discount is 13%,what is the amount of the discount?

Question

Quizplus · Accepted Answer

The discount is 1% because the effective annual cost of forgoing the discount is 13%, and the discount period is 10 days. So, the discount is 13% / 365 days * 10 days = 1%.

Your Firm Purchases Goods from Its Supplier with a Discount