Question
Accounts payable stretching is simply paying after the due date. Wally Marts purchases supplies on terms 2/5, net 30. Wally Marts takes advantage of their
Accounts payable stretching is simply paying after the due date. Wally Marts purchases supplies on terms 2/5, net 30. Wally Marts takes advantage of their purchasing power and stretches their accounts payable by 20 days. What is the effective annual cost of if it chooses not to take the discount and pay on day 30? What is the effective annual cost of the not taking the discount given Wally Marts practice of accounts payable stretching? What is the maximum APR (assume 45-day compounding) you be willing to pay on a 45-day bank loan to take advantage of the discount?
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