Trade credit terms are 2/10, net 40.
File name: Trade credit terms.xlsx File type: . xlsx PRICE: 7
a. What is the true interest cost of skipping the
discount and paying on day 40? Estimate both the APR and the APY.
b. If payment is stretched to day 55 (fifteen days
late), calculate the true interest cost of skipping the discount if the
supplier accepts the payment without penalty at that time. Again, estimate both
the APR and the APY.
TUTORIAL
PREVIEW
The APR for trade credit is: APR =
(Discount%/[100% - Discount%]) * (365/[Total period - Discount period])
|
Discount % =
|
2%
|
|||
|
Total period
=
|
40
|
