Question

A firm offers terms of 1/10, net 35. 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 60 days. 
c. The discount period is increased to 15 days. 



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  • CreatedSeptember 19, 2013
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