Assume that a firm gets inventory from their suppliers with the following credit terms: 4/15 net 45 , What is the nominal cost of trade credit? What is the effective cost of trade credit? If the firm decides to take the discount and pay early, they could borrow money from a bank using a short term loan instead. The loan terms for the short-term loan are that interest would be simple interest of 16% paid monthly. The loan would also have a 15% compensating balance. For calculation purposes, assume that the firm would borrow $100,000 (principal). Compute the nominal and effective interest rate of the short-term loan. Draw the cash flow timellne for this loan. Then flli in the values used in the TVM calculation: - N= - PV= - PMT = - FV= What is the nominal cost of the short-term loan? What is the effective cost of the short-term loan? Given the answers you found for the cost of trade credit and the cost of short-term borrowing, should the firm take the discount and pay early oR forgo the discount and pay late. What is the nominal cost of trade credit? What is the effective cost of trade credit? - N= - PV= - PMT = - FV= What is the nominal cost of the short-term loan? What is the effective cost of the short-term loan? Given the answers you found for the cost of trade credit and the cost of short-term borrowing, should the firm take the discount and pay early. OR forgo the discount and pay late