Exercise $5\mathrm{.}16$

LO $5-5$

Cash discounts$-$ROI

a$.$ Calculate the approximate annual rate of return on investment of the following cash discount terms:

$\frac{1}{15},n30.$

$\frac{2}{10},n60.$

$\frac{1}{10},n90.$

b$.$ Which of these terms, if any, is not likely to be a significant incentive to the customer to pay promptly? Explain your answer.