Problem 16-07 Cost of Trade Credit Calculate the nominal annual cost of nonfree trade credit under each of...

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Finance

Problem 16-07
Cost of Trade Credit
Calculate the nominal annual cost of nonfree trade credit undereach of the following terms. Assume that payment is made either onthe due date or on the discount date. Assume 365 days in year foryour calculations. Do not round intermediate calculations.
1/15, net 25. Round your answer to two decimal places.
%
2/10, net 55. Round your answer to two decimal places.
%
3/10, net 55. Round your answer to two decimal places.
%
2/10, net 50. Round your answer to two decimal places.
%
2/15, net 40. Round your answer to two decimal places.
%

Answer & Explanation Solved by verified expert

4.5 Ratings (844 Votes)

a For 115 net 25 This implies that customer will get 1discount if he pays within 15 days and total due days are 25daysDiscount 1 Discount days 15 Due days 25t Due days discount days 25 15 10 daysLet N Nominal annual cost of non free trade creditN 0368686 368686 3687 rounded to two decimalplacesNominal Annual cost of non free trade credit See Answer

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