A firm currently offers terms of sale of 3/15, net 30. Calculate the effective annual rate. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective annual rate

%

a-1.	Calculate the effective annual rate if the terms are changed to 4/15, net 30. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective annual rate

%

a-2.

What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount?

	Increase
	Decrease

b-1.	Calculate the effective annual rate if the terms are changed to 3/25, net 30. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective annual rate

%

b-2.

What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount?

	Increase
	Decrease

c-1.	Calculate the effective annual rate if the terms are changed to 3/15, net 20. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective annual rate

%

c-2.

Is there any difference between the implicit interest rate for terms of 3/25, net 30 and 3/15, net 20?

	Yes
	No