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26 January, 04:41

A firm is offered trade credit terms of 2/8, net 45 days. The firm does not take the discount. It pays after 58 days. What is the effective annual cost (EFF%) of not taking this discount

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  1. 26 January, 06:57
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    Answer: 15.89%

    Explanation:

    Since no discounts were taken, this company made your job a whole lot easier because if we are for instance assuming a 365 day year then you simply take the base period of payments which is 58 days in this scenario and divide by 365.

    So it would come out like,

    = 58/365

    = 15.89%

    If you need any clarification just drop a comment. Cheers.
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Home » Business » A firm is offered trade credit terms of 2/8, net 45 days. The firm does not take the discount. It pays after 58 days. What is the effective annual cost (EFF%) of not taking this discount
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