Credit

terms.

As manager of Fly-by-Night Airlines, you decide to allow customers

90

days to pay their bills. To encourage early payment, though, you allow them to reduce their bills by

1.6%

if they pay within the first

59

days. At what implied effective annual interest rate are you loaning money to your customers? What if you extend the discount to

75

days and allow full payment up to

180

days?