Chapter 14 Assignment Back to Assignment Attempts 1 Keep the Highest 1/3 7. Cost of trade credit Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit. These terms will affect the cost of the asset for both the buyer and the seller. Consider the following case: Tasty Tuna Corporation buys on terms of 2/15, net 45 from its principal supplier. If Tasty Tuna receives an invoice for $1,889.99, then the true price of this invoice is The supplier is willing to extend credit that exhibits an annual percentage rate (APR) of Suppose Tasty Tuna doesn't take the discount and instead chooses to pay its supplier five days late-so that on average, Tasty Tuna will pay its supplier on the 50th day after the date of sale. As a result, Tasty Tuna can decrease its actual cost of trade credit by by paying late. Grade It Now Save & Continue Continue without saving