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Effective Cost of Trade Credit The D.J. Masson Corporation needs to raise $400,000 for 1 year supply working capital to a new store. Masson buys
Effective Cost of Trade Credit The D.J. Masson Corporation needs to raise $400,000 for 1 year supply working capital to a new store. Masson buys from its suppliers on terms of 3/10, net 70, and it currently pays on the 10th day and takes discounts. However, it could forgo the discounts, pay on the 70th day, and thereby obtain the needed $400,000 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. 18.81 %
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