A firm offers its customers 3/5 net 25. What is the cost of trade credit to a customer who chooses to pay on day 25?
A) 32.3%
B) 65.5%
C) 68.4%
D) 74.3%

Name: A firm offers its customers 3/5 net 25. What is the cost of trade credit to a customer who chooses to pay on day 25? A) 32.3% B) 65.5% C) 68.4% D) 74.3%
Brand: Quizplus
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Question

Quizplus · Accepted Answer

D) Interest for 3 days = (3 / 97) + 1 = 1.0309% Number of 20 days period in a year = 365 / 20 = 18.25; Effective annual rate or cost of trade credit = (1.0309)^18.25 - 1 = 1.74347 - 1 = 74.3%

A Firm Offers Its Customers 3/5 Net 25