NATO Co.’s business is booming, and it needs to raise more capital. The company purchases supplies from a single supplier on terms of 1/10, net 20 days, and it currently takes the discount. One way of getting the needed funds would be to forgo the discount, and NATO’s owner believes she could delay payment to 30 days without adverse effects. What is the effective annual rate of stretching the accounts payable?
NATO Co.’s business is booming, and it needs to raise more capital. The company purchases supplies from a single supplier on terms of 1/10, net 20 days, and it currently takes the discount. One way of getting the needed funds would be to forgo the discount, and NATO’s owner believes she could delay payment to 30 days without adverse effects. What is the effective annual rate of stretching the accounts payable?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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NATO Co.’s business is booming, and it needs to raise more capital. The company purchases supplies from a single supplier on terms of 1/10, net 20 days, and it currently takes the discount. One way of getting the needed funds would be to forgo the discount, and NATO’s owner believes she could delay payment to 30 days without adverse effects. What is the effective annual rate of stretching the accounts payable?
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