**Evaluating Trade Credit Discounts****Scenario:**A firm buys on trade credit terms of 5/15, net 90 and decides to forgo the trade credit discount, paying instead on the net day.**Question:**What is the annualized cost of foregoing the discount? (Assume a 365-day year.)**Calculation:**The annualized cost of the trade credit terms of 5/15, net 90 is _____%. (Round to two decimal places.)

> Given:> Discount = 5%> Discount period = 15 days> Total period = 90 days

(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.)

(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.)

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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