A company is about to stop taking cash discounts for early payment on $500,000 of purchases from a supplier who is offering terms of 1/20 net 60. What is the effective annual percentage cost of forgoing this cash discount to the nearest full percentage point? Use a 365 day year in your calculations.

a) 1 percent

b) 5 percent

c) 10 percent

d) 20 percent

e) None of the other answers