Question
Stay Tuff Corp. buys most of its raw materials from a single supplier. This supplier sells to Stay Tuff Corp. on terms of 3/20, net
Stay Tuff Corp. buys most of its raw materials from a single supplier. This supplier sells to Stay Tuff Corp. on terms of 3/20, net 45. 1. What is the cost per period of the trade credit extended to Stay Tuff Corp.? (Use 365 days as the length of a year in all calculations.) a. 3.40% b. 3.09% c. 3.71% d. 3.55% 2. What is the nominal annual cost of Stay Tuff Corp.'s trade credit? a. 45.11% b. 49.62% c. 38.34% d. 40.60% 3. What is the effective annual rate of interest on trade credit? a. 67.20% b. 56.00% c. 53.20% d. 61.60% 4. If Stay Tuff Corp.'s supplier shortens the discount period to five days, this will ________the cost of the trade credit. a. increase b. decrese
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