A rm offers terms of 1/10, net 35. What effective annual interest rate does the rm earn
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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Effective interest rate discount 100 discount X 360 FT DP Where FT t...View the full answer
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Related Book For 
Essentials Of Corporate Finance
ISBN: 9780073405131
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
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