What is effective annual interest rate of this trade credit

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Reference no: EM133491989

Question: The D.J. Masson Corporation needs to raise $300,000 for 1 year to supply working capital to a new store. Masson buys from its suppliers on terms of 1/10, net 85, and it currently pays on the 10th day and takes discounts. However, it could forgo the discounts, pay on the 85th day, and thereby obtain the needed $300,000 in the form of costly trade credit. What is the effective annual interest rate of this trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM133491989

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