Cost of trade credit

Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale

for the buyer as well as the seller.

Tasty Tuna Corporation buys on terms of $\frac{2}{15},$ net $30$ from its chief supplier.

If Tasty Tuna receives an invoice for $$1,545\mathrm{.}78,$ what would be the true price of this invoice?

$$1,514\mathrm{.}86$

$$1,893\mathrm{.}57$

$$1,211\mathrm{.}89$

$$1,287\mathrm{.}63$

The nominal annual cost of the trade credit extended by the supplier is

$,$ assuming a $365-$day year.

Suppose Tasty Tuna does not take advantage of the discount and then chooses to pay its supplier late$-$so that on average. On average, Tasty Tuna

will pay its supplier on the $35$th day after the sale. As a result, Tasty Tuna can decrease its nominal cost of trade credit by

by paying late.