ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year. REQUIRED: Simple annual effective cost of paying on 45th day instead of the 15th day Compounded annual effective cost of paying on 45th day instead of the 15th day Should ABC pay on the 15th day or 45th day?
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ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year.
REQUIRED:
- Simple annual effective cost of paying on 45th day instead of the 15th day
- Compounded annual effective cost of paying on 45th day instead of the 15th day
- Should ABC pay on the 15th day or 45th day?
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- Your company has been offered credit terms on its purchases of 4/30, net 90days. What will be the nominal annual cost of trade credit if your companypays on the 35th day after receiving the invoice? (Assume a 365-day year.) Show your complete solution.A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) Questions: - How many days are there per period? - What is the effective annual cost of not taking this discount? - The number of compounding period is ___.ABC has a major supplier that offers a credit term of 2/15, n/45. Cash not yet used for payments are generally kept in an account that earns ABC 2.5% per year. Use 360 days in a year. Compute for the following: 1. Simple annual effective cost of paying on 45th day instead of the 15th day. 2. Compounded annual effective cost of paying on 45th day instead of the 15th day. Please create a detailed solution for the two questions. Thank you
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