Get correct answer accounting questions A manufacturer offers credit terms of 2/10, net 30,but a business consistently pays after 45 days. Use a365-day year. Calculate the effective cost of tradecredit.

Step 1: Definition of Effective Cost of Trade CreditThe effective cost of trade credit is the…

Answered: A manufacturer offers credit terms of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 10QTD

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A large retailer obtains merchandise under the credit terms of 3/10, net 30, but routinely takes 50 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places. Don't use Excel

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A manufacturer offers credit terms of 2/10, net 30, but a business consistently pays after 45 days. Use a 365-day year. Calculate the effective cost of trade credit.