Cost of Trade Credit If a firm buys under terms of 3 15, net 30, but actually pays on the 20th day and still takes the discount , what is the nominal cost of its nonfree trade credit Assume a 365 day year Do not round intermediate calculations Round your answer to two decimal places Does it receive more or less credit than it would if it paid within 15 days I Paying before the discount period and taking the discount gives the firm more credit than it would receive if it paid within 15 days II Paying after the discount period, but still taking the discount gives the firm more credit than it would receive if it paid within 15 days III Paying after the discount period, but still taking the discount gives the firm less credit than it would receive if it paid within 15 days Effective Cost of Trade Credit The D J Masson Corporation needs to raise $800,000 for 1 year to supply working capital to a new store Masson buys from its suppliers on terms of 3 10, net 85, and it currently pays on the 10th day and takes discounts However, it could forgo the discounts, pay on the 85th day, and thereby obtain the needed $800,000 in the form of costly trade credit What is the effective annual interest rate of this trade credit Assume a 365 day year Do not round intermediate calculations Round your answer to two decimal places

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Cost of Trade Credit If a firm buys under terms of 3/15, net 30, but actually pays on the 20th day and still takes the

Cost of Trade Credit

If a firm buys under terms of 3/15, net 30, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.

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Does it receive more or less credit than it would if it paid within 15 days?
I. Paying before the discount period and taking the discount gives the firm more credit than it would receive if it paid within 15 days. II. Paying after the discount period, but still taking the discount gives the firm more credit than it would receive if it paid within 15 days. III. Paying after the discount period, but still taking the discount gives the firm less credit than it would receive if it paid within 15 days.

Effective Cost of Trade Credit

The D.J. Masson Corporation needs to raise $800,000 for 1 year to supply working capital to a new store. Masson buys from its suppliers on terms of 3/10, net 85, and it currently pays on the 10th day and takes discounts. However, it could forgo the discounts, pay on the 85th day, and thereby obtain the needed $800,000 in the form of costly trade credit. What is the effective annual interest rate of this trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.