15. Credit terms (S31.3) Company X sells on a 1/30, net 60 basis. Customer Y buys goods invoiced at $1,000.

a. How much can Y deduct from the bill if Y pays on day 30?

b. What is the effective annual rate of interest if Y pays on the due date rather than on day 30?

c. How would you expect payment terms to change under the following conditions?

Chapter 31 Working Capital Management 913 i. The goods are perishable.

ii. The goods are not rapidly resold.

iii. The goods are sold to high-risk firms.