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    Discount Credit Terms - Effective Annual Rate

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    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)

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    https://brainmass.com/business/accounts-receivable-management/discount-credit-terms-effective-annual-rate-101269

    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.

    $2.19

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