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    Cost of foregoing cash discount

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    Use the following information to answer the following question: Quick Corp. makes its purchases under terms of 2/10 net 30. If Quick Corp. foregoes the discount and pays for its purchases according to the terms of its trade credit, what is Quick's effective cost of using this source of credit?

    a.) 26.67%

    b.) 31.48%

    c.) 36.73%

    d.) 51.21%

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    Solution Summary

    The solution explains how to determine the cost of not taking the cash discount.