Explore BrainMass

Explore BrainMass

    Discount Credit Terms - Effective Annual Rate

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Your company has been offered credit terms on its purchases of 3/15, net 30 days. If you do not take the discount and pay after 50 days what is your company's effective annual cost (EFF%) of not taking the discount? What would be the effective annual cost if your company paid after 30 days? (Assume a 360-day year)

    © BrainMass Inc. brainmass.com June 3, 2020, 7:30 pm ad1c9bdddf

    Solution Preview

    Part a)
    The effective time for credit = 50-15=35 days
    Amount payable if ...

    Solution Summary

    This solution contains calculations to aid you in understanding the effective annual rate.