Annualized effective cost of missing trade credit discount

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Reference no: EM131320512

1. Assume an opportunity cost of 10%, what should you do under the trade credit terms, 2/10, net 45?

a. Forgo the discount and pay on Day 10.

b. Take the discount and pay on Day 45.

c. Forgo the discount and pay on Day 45.

Take the discount and pay on Day 10.

2. If the annualized effective cost of missing the trade credit discount is 15.05%, the length of discount period is 15 days, and the length of the net-trade credit period is 90 days, then what is the discount percentage?

a. 2%

b. 2.5%

c. 1.5%

d. 3%

Reference no: EM131320512

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