Question
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
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? | ||||
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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? | ||||
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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? | ||||
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