Fairweather Corporation purchases merchandise on terms of 2/15, net 40, and its gross purchases (i.e., purchases before taking off the discount)are $800, 000 per year.What is the maximum dollar amount of costly trade credit the firm could get, assuming it abides by the supplier's credit terms? (Assume a 365-day year.)

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Net purchases = Gross(1 - Disc.%)= $784, 000
Net per day = Net/365 = $2, 148
Total trade credit = Net days ×Net per day = $85, 918
Free credit = Net per day ×Discount days = $32, 219
Costly credit = Total credit - Free credit = $53, 699

Fairweather Corporation Purchases Merchandise on Terms of 2/15, Net 40