A firm offers terms of 1y10, net 30. What effective annual interest rate does the firm earn

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A firm offers terms of 1y10, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculations, explain what will happen to this effective rate if:

a. The discount is changed to 2 percent.

b. The credit period is increased to 45 days.

c. The discount period is increased to 15 days.

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Fundamentals of corporate finance

ISBN: 978-0078034633

10th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Question Posted: Mar 13, 2014 08:57 AM

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A firm offers terms of 1y10, net 30. What effective annual interest rate does the firm earn

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Fundamentals of corporate finance

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