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    Accounting and annual rates of return

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    Answer the following questions assuming a 360-day year. Calculate the approximate annual rate of return on investment of the following cash discount terms:

    1/15, net 30
    2/10, net 60
    1/10, net 90

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    Solution Preview

    Recall the following:
    Annual rate of return = [Discount %/(100%-Discount %)]* [Number of days in a year/(Credit Period-Discount Period)]

    a) 1/15, net 30
    Discount = ...

    Solution Summary

    The solution depicts the steps by step methodology to calculate the approximate annual rate of return on investment of the given cash discount terms.

    $2.19

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