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APR and APY Calculation Under Credit Term of 1.5/15 Net 50

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Suppose you are offered trade credit term of 1.5/15, net 50. ( Calculate both the APR and APY of the cost of trade credit)Using the information what would be the APR cost if you "stretched" the payable and paid after 75 days. (Show work)

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Solution Summary

The solution examines trade credit terms and APR.

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APR = [cash discount / (1 - cash discount)] x [ 360 days/ (days credit outstanding - discount period)]

[1.5% / (1 - ...

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