terms. As manager of Fly-by-Night Airlines, you decide to allow customers 90 days to pay their bills. To encourage early payment, though, you allow them to reduce their bills by 1.9% if they pay within the first 56 days. At what implied effective annual interest rate are you loaning money to your customers? What if you extend the discount to 55 days and allow full payment up to 180 days? At what implied effective annual interest rate are you loaning money to your customers?
terms. As manager of Fly-by-Night Airlines, you decide to allow customers 90 days to pay their bills. To encourage early payment, though, you allow them to reduce their bills by 1.9% if they pay within the first 56 days. At what implied effective annual interest rate are you loaning money to your customers? What if you extend the discount to 55 days and allow full payment up to 180 days? At what implied effective annual interest rate are you loaning money to your customers?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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terms.
As manager of Fly-by-Night Airlines, you decide to allow customers
90
days to pay their bills. To encourage early payment, though, you allow them to reduce their bills by
1.9%
if they pay within the first
56
days. At what implied effective annual interest rate are you loaning money to your customers? What if you extend the discount to
55
days and allow full payment up to
180
days?At what implied effective annual interest rate are you loaning money to your customers?
(Round to two decimal places.)
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