A vendor offers terms of 2/10,n/30.What is the ANNUAL interest rate the vendor is charging a buyer who does not pay within 10 days? (Assume there are 360 days in the year.

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The terms 2/10, n/30 mean that the buyer can take a 2% discount if they pay within 10 days; otherwise, the net (full) amount is due in 30 days. The 2% discount lost by not paying early effectively becomes an interest charge for the additional 20 days (30-10 days) of credit. To annualize: (2% / 20 days) * 360 days/year = 36%.

A Vendor Offers Terms of 2/10,n/30