A firm buys on terms of 3/10, net 30. What is the cost of trade credit under these terms?

Seleccione una:

a. 55.7%

b. 47.4%

c. 31.5%

d. 23.2%

Gamma, Inc. plans to sell $1 million in 270-day-maturity commercial paper on which it will pay discounted interest at an annual rate of 12%. In addition, Gamma expects to incur a cost of $1,000 in dealer placement fees and other expenses to issue the paper. What is the effective cost of the paper to Gamma?

Seleccione una:

a. 12.22%

b. 12.78%

c. 13.20%

d. 13.35%