WebSep 9, 2015 · Customers currently take three months credit. We are considering offering a discount of 4% for payment within one month. Calculate the effective % cost p.a. of the discount. Answer to Example 4 Effective annual cost = 4/ 96 x 12/2 x 100% = 0.041 x 6 x 100% = 25% p.a. Where is here power of? From lectures: The same example shows the … WebNov 9, 2024 · As can be seen using this formula we get the same answer as follows: Cost of trade credit = (1 + d / (1 - d)) (365 / Days) - 1 d = 1% Days = 30-14 = 16 Cost of …

Answered: What are the nominal and effective… bartleby

WebGross sales last year were $4,562,500 and accounts receivable averaged $437,500. Half of Grunewald’s customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald’s nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for ... irrigation mean

Cost Of Trade Credit Calculator Calculate Cost Of Trade Credit ...

Trade credit is a business's accounts payable, which it can use to finance its operations. The cost of trade credit refers to the amount that a company owes to its vendors and suppliers on products, materials, inventory and other items necessary for maintaining operations. Often, the cost of trade credit makes … See more When a business with a high credit rating purchases materials from a supplier, the supplier can allow the business to delay the purchase … See more To calculate the cost of trade credit, use the formula cost of trade credit = [(discount %) / (100 - discount %)]x [(360) / (payment days - discount days)]and follow the steps below: See more Although the cost of trade can represent a business's liabilities, there are several reasons why a company might consider accessing trade … See more WebJan 14, 2024 · Calculate that effective annual cost of each of the following trade credit terms and payment dates: a. 1/10, net 30, paying on day 20. b. 2/10, net 40, paying on day 30. ... Effective Annual Credit Cost Formula = Discount (%) / ( 1 - Discount) x 360 / ( Allowed Days - Discount Days) Credit Terms Explanation Effective Interest 1/10 net 30 … WebAnswered by Prof-Oluoch177. Assume that its trade credit terms are 4/10, net 60 and Mackenzie pays on day 20. Using a 365 day year, what is Mackenzie's Effective Annual Rate (EAR) cost of trade credit? This means that the customer will get a discount of 4% if paid within 10 days, and if discount is not availed, the amount is due in 60 days. portable desk with bags