Last week, Zachary met with several of the firm's larger, more creditworthy customers, induding the Alled Biscuit Company (ABc). In the course of this meeting, he suggested terms of 1/10 net 15, but two things became quickly apparent: Not everyone remembered how to calulate the cost of trade credit, so a review of the equation should be conducted; and . While everyone acknowledged that these terms are consistent with the industry's standards, they are concerned with the magnitude of the implicit costs associated with paying on various dates throughout the credit period. Therefore, you need to do two things: Identify the individual elements in the annual financing cost of trade credit equation; and . Calculate the implicit costs of paying on several dates throughout Tucker's credit period. Begin with the identification of the variables in the annual financing cost of trade credit equation. Then, use the equation to compute the annual financing cost of the trade credit assuming that the invoices are paid on the indicated days. Remember, Zachary suggested terms of 1/10 net 15. Variable A (100 Variable C) (Variable B- Variable D) Variable E Cost of Trade Credit s Cost of Trade Credit Payment Date Dav 10 Day 11 Day 15 Day 25 (Two weeks late) Variable Identity of the Variable Options for variable A: 365 days per year, percent cash discount or invoice amount Options for variable B: credit period, discount period or percent cash discount Options for variable C: discount period, cost of credit or percent cash discount Option for variable D: discount period, percent cash discount or 365 days per year Options for variable E: cost of credit, invoice amount or 365 days per year