Question: Little Store buys inventory using trade credit. The terms are stated as 2/10, n30, but Little Store rides the credit and generally pays on the

Little Store buys inventory using trade credit. The terms are stated as 2/10, n30, but Little Store rides the credit and generally pays on the 40th day. Occasionally, payment is made as late as the 50th day. What is the approximate cost of the credit
a. if paid on time?
b. if paid on the 40th day?
c. if paid on the 50th day? What is the compound cost of credit in each case? Why does the cost change?

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