ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year. Simple annual effective cost of paying on 45th day instead of the 10th day Compounded annual effective cost of paying on 45th day instead of the 10th day Should ABC pay on the 10th day or 45th day? 10th 45th
ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year. Simple annual effective cost of paying on 45th day instead of the 10th day Compounded annual effective cost of paying on 45th day instead of the 10th day Should ABC pay on the 10th day or 45th day? 10th 45th
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year.
Simple annual effective cost of paying on 45th day instead of the 10th day
Compounded annual effective cost of paying on 45th day instead of the 10th day
Should ABC pay on the 10th day or 45th day?
10th
45th
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