Short Term Financing 2

Short Term Financing 2 - B. 23.63% C. 26.18% D. 37.24% E....

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Old Exam Questions - Short-term Financing Page 2 of 2 Pages 5. Assume that your firm buys on terms of 2/15, net 30, but that it does not take the discount and pays 35 days after the invoice date. You may also assume that net purchases amount to $720,000 per year. Given this information, and assuming a 365- day year, determine the nominal annual cost of trade credit. A. 17.21%
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Unformatted text preview: B. 23.63% C. 26.18% D. 37.24% E. 50.67% 6. A firm is offered trade credit terms of 3/10, net 30. The firm does not take the discount, and even takes an additional 20 days paying on day 50 instead of on day 30. Using a 360-day year, what is the annual cost (on a nominal basis, not effective) of not taking this discount? A. 27.84% B. 24.49% C. 20.18% D. 22.27% E. 30.63%...
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