7. Suppose your firm buys $1,000 worth of supplies on credit with terms 3/15 n60.

a. What does 3/15 n60 mean?

b. If you pay the bill on the 14^th day after the purchase, what is the cost of the trade credit you have used for the 14-day period?

c. If you pay the bill on the 50^th day after the purchase, what is the cost of the trade credit you have used for the 35-day period after the discount period ended?

8. If your firm buys $1,000 worth of supplies on credit with terms 3/15 n60 and pays the bill on the 60^th day after the purchase:

a. What is the approximate, or nominal, cost of trade credit as an annual rate?

b. What is the exact cost of trade credit as an annual rate?