Illustrate what is the effective yearly interest rate

Assignment Help Financial Accounting

Reference no: EM13120812

The Orthopedic Sports Clinic has the opportunity to purchase a large amount of supplies at a reduced price of $1,200.The payment terms will be that payment is due in full on the 15th of the month. A $20 late fee will be added if the payment is made after the 15th of the month.

A. What is the effective annual interest rate if the clinic pays the bill on the 17th of the month?

B. What is the effective annual interest rate if the clinic pays the bill on the 30th of the month?

C. Assuming that the clinic is not going to pay the $1,200 bill until the 30th of the month, is it still worthwhile to take advantage of this special sale if the normal price of these supplies is $1,850?Explain your answer

Reference no: EM13120812

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