(Annual percentage yield) Compute the cost of the following trade credit terms using the compounding formula, or effective annual rate. Note: Assume a 30-day month and 360-day year. a. 4/10, net 60 b. 2/15, net 45 c. 4/10, net 60 d. 3/10, net 30 a. When payment is made on the net due date, the APR of the credit terms of 4/10, net 60 is%. (Round to two decimal places.)

(Annual percentage yield) Compute the cost of the following trade credit terms using the compounding formula, or effective annual rate. Note: Assume a 30-day month and 360-day year. a. 4/10, net 60 b. 2/15, net 45 c. 4/10, net 60 d. 3/10, net 30 a. When payment is made on the net due date, the APR of the credit terms of 4/10, net 60 is%. (Round to two decimal places.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 7P: Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume...

See similar textbooks

Similar questions

Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date. a. 1/15, net 20 b. 2/10, net 60 c. 3/10, net 45 d. 2/10, net 45 e. 2/15, net 40
What are the nominal and effective costs of trade credit under the credit terms of 2/20, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
Cost of Trade Credit Calculate the nominal annual cost of trade credit under each of the following terms. Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. a. 1/15, net 25. % b. 2/10, net 60. % c. 3/10, net 50. % d. 2/10, net 50. % e. 2/15, net 40. %
Calculate the nominal annual cost of trade credit under each of the following terms. Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. 1/15, net 25. % 2/10, net 60. % 3/10, net 55. % 2/10, net 55. % 2/15, net 45.
Cost of Trade Credit Calculate the nominal annual cost of trade credit under each of the following terms. Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. 1/15, net 20. % 2/10, net 60. % 3/10, net 50. % 2/10, net 50. % 2/15, net 40. %
The approximate effective cost (EC) of financing the discount price of trade credit under terms 2/10, net/30 using a 360 day year is?
If the annualized cost of the trade credit discount is 7.37%, what is the net trade credit period? Assume a discount percentage of 1% for payments received on or before 20 days. Select one: a. 20 days b. 30 days c. 50 days d. 70 days
13. Trade credit terms of 2/10, net 90 are available. Calculate the cost of trade credit when payment is made on the net due date using the APR. Use a 360 day year.
14. Trade credit terms of 2/10, net 90 are available. Calculate the cost of trade credit when payment is made on the net due date using the EAR (also known as APY). Use a 360 day year.
(Related to Checkpoint 18.2) (Evaluating trade credit discounts) If a firm buys on trade credit terms of 5/15, net 90 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 365-day year)? The annualized cost of the trade credit terms of 5/15, net 90 is %. (Round to two decimal places.)
Required: a. A firm currently offers terms of sale of 3/25, net 50. Calculate the effective annual rate. a-1. Calculate the effective annual rate if the terms are changed to 4/25, net 50. a-2. What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount? b-1. Calculate the effective annual rate if the terms are changed to 3/35, net 50. b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount? c-1. Calculate the effective annual rate if the terms are changed to 3/25, net 40. c-2. Is there any difference between the implicit interest rate for terms of 3/35, net 50 and 3/25, net 40?
Explain the meaning of a 20% annual percentage rate (APR) quotedby the credit c.ird company? And how the credit card company calculates theinterest payment?