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