A firm offers terms of 2/8, net 45. What effective annual interest rate does the firm earn

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A firm offers terms of 2/8, net 45. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculations, explain what will happen to this effective rate if:

a. The discount is changed to 3 percent.

b. The credit period is increased to 60 days.

c. The discount period is increased to 15 days.

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Fundamentals Of Corporate Finance

ISBN: 9780072553079

6th Edition

Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan

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Question Posted: Oct 05, 2023 05:05 AM

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A firm offers terms of 2/8, net 45. What effective annual interest rate does the firm earn

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Fundamentals Of Corporate Finance

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