Unformatted text preview: 1/99 = 1.01% on discount if pay in 15 days, otherwise pay 45 days later. So, get 60  15 = 45 days of credit at a cost of 1/99 = 1.01%. There are 360/45 = 8 periods, so the effective cost rate is: (1 + 1/99) 8 1 = (1.0101) 8 1 = 8.3723%. Thus, the least expensive type of credit for Yonge is trade credit with an effective cost of 8.3723 percent. Answers and Solutions: 27  9...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff
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