Provide solution for this question What is the nominal cost of trade credit ifthe terms are 3/10, net 40 assuming thatcustomers forego the discount and pay onthe 40th day?a) 35.9%b) 36.4%c) 37.6%d) 38.2%

Explanation of Trade Credit Terms (e.g., 3/10, net 40)Trade credit terms define the conditions under…

Answered: What is the nominal cost of trade…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 8P

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Captain Whitman Ship Supplies offers terms of 3/15, net 45. If a purchaser takes the discount and pays on the 10th day, what is the nominal cost of trade credit? Now suppose a purchaser actually pays on the 20th day but still takes the discount. What is the actual nominal cost of the trade credit?
If a firm buys on terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit? Does it receive more or less credit than it would if it paid within 15 days?
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What are the nominal and effective costs of trade credit under the credit terms of 2/20, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
The approximate effective cost (EC) of financing the discount price of trade credit under terms 2/10, net/30 using a 360 day year is?
hat are the nominal and effective costs of trade credit under the credit terms of 2/20, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit:
Cost of Trade Credit What are the nominal and effective costs of trade credit under the credit terms of 4/10, net 30? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date. 2/15, net 20 1/10, net 45 3/15, net 45 2/ 10, net 50 2/15, net 35
5. A firm is offered trade credit terms of 3/15, net 45 days. The firm does not take the discount, and it pays after 67 days. What is the nominal annual cost of not taking the discount? (Assume a 365-day year.) A. 21.71% C. 22.95% E. 24.52% B. 22.07% D. 23.48%
On a 365-day basis, what is the rate per period of using trade credit if terms are 2/10, net 30, and payment is made on the twentieth day? * 104% 2.04% 109% 10% 1.09% On a 365-day basis, what is the effective annual rate of using trade credit if terms are 2/10, net 30, and payment is made on the twentieth day? * 1.09% 2.04% 109% 10% 104%
If the annualized cost of the trade credit discount is 7.37%, what is the net trade credit period? Assume a discount percentage of 1% for payments received on or before 20 days. Select one: a. 20 days b. 30 days c. 50 days d. 70 days

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What is the nominal cost of trade credit if the terms are 3/10, net 40 assuming that customers forego the discount and pay on the 40th day? a) 35.9% b) 36.4% c) 37.6% d) 38.2%