Required:
a. A firm currently offers terms of sale of 3/10, net 50. Calculate the effective annual rate.
a-1. Calculate the effective annual rate if the terms are changed to 4/10, net 50.
a-2. What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount?
b-1. Calculate the effective annual rate if the terms are changed to 3/20, net 50.
b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount?
c-1. Calculate the effective annual rate if the terms are changed to 3/10, net 40.
c-2. Is there any difference between the implicit interest rate for terms of 3/20, net 50 and 3/10, net 40?
Required: a. A firm currently offers terms of sale of 3/10, net 50. Calculate the effective annual rate. a-1. Calculate the effective annual rate if the terms are changed to 4/10, net 50. a-2. What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount? b-1. Calculate the effective annual rate if the terms are changed to 3/20, net 50. b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount? c-1. Calculate the effective annual rate if the terms are changed to 3/10, net 40. c-2. Is there any difference between the implicit interest rate for terms of 3/20, net 50 and 3/10, net 40? Complete this question by entering your answers in the tabs below. Req A Req A1 and A2 Req B1 and B2 Req C1 and C2 A firm currently offers terms of sale of 3/10, net 50. Calculate the effective annual rate. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Effective annual rate % Reg A Req A1 and A2 Req B1 and B2 Req C1 and C2 a-1. Calculate the effective annual rate if the terms are changed to 4/10, net 50. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a-2. What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount? Show less a-1. % Effective annual rate Effect on implicit interest rate a-2. Req A Req A1 and A2 Req B1 and B2 Req C1 and C2 b-1. Calculate the effective annual rate if the terms are changed to 3/20, net 50. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount? Show less % b-1. Effective annual rate b-2. Effect on implicit interest rate Reg A Req A1 and A2 Req B1 and B2 Req C1 and 2 c-1. Calculate the effective annual rate if the terms are changed to 3/10, net 40. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c-2. Is there any difference between the implicit interest rate for terms of 3/20, net 50 and 3/10, net 40? % C-1. Effective annual rate |c-2. Is there any difference between the implicit interest rate for terms of 3/20, net 50 and 3/10, net 40? Req A Req A1 and A2 Req B1 and B2 Req C1 and C2 b-1. Calculate the effective annual rate if the terms are changed to 3/20, net 50. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount? Show less % b-1. Effective annual rate b-2. Effect on implicit interest rate Reg A Req A1 and A2 Req B1 and B2 Req C1 and 2 c-1. Calculate the effective annual rate if the terms are changed to 3/10, net 40. (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c-2. Is there any difference between the implicit interest rate for terms of 3/20, net 50 and 3/10, net 40? % C-1. Effective annual rate |c-2. Is there any difference between the implicit interest rate for terms of 3/20, net 50 and 3/10, net 40?
