Question: 1 . XYZ Company Limited needs to raise $ 2 5 0 , 0 0 0 for 1 year to supply working capital to a

1. XYZ Company Limited needs to raise $250,000 for 1 year to supply working capital to a new store. XYZ buys from its suppliers on terms of 3/10, net 90, and it currently pays on the 10th day and takes discounts. However, it could forgo the discounts, pay on the 90th day, and thereby obtain the needed $500,000 in the form of costly trade credit.What is the effective annual interest rate of this trade credit?

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