Chapter 14 Assignment Back to Assignment Attempts: Keep the Highest: 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 Cold Duck Manufacturing Inc. buys on terms of 3/15, net 45 from its principal supplier. If Cold Duck receives an invoice for $1,889.99, then the true price of this invoice is $1,833.29 Y The supplier is willing to extend credit that exhibits a nominal annual cost of Suppose Cold Duck doesn't take the discount and instead chooses to pay its supplier five days' late-so that on average, Cold Duck will pay its supplier on the 50th day after the date of sale. As a result, Cold Duck can decrease its actual nominal cost of trade credit by by paying late Grade It Now Save & Continue Continue without saving Chapter 14 Assignment Back to Assignment Attempts: Keep the Highest: 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 Cold Duck Manufacturing Inc. buys on terms of 3/15, net 45 from its principal supplier. If Cold Duck receives an inve 12.54% 889.99, then the true price of this invoice is $1,833.29 Y 13.17% 14.4296 24.45% The supplier is willing to extend credit that exhibits a nominal annual cost of Suppose Cold Duck doesn't take the discount and instead chooses to pay its supplier five days' late-so that on aver uck will pay its supplier on the 50th day after the date of sale. As a result, Cold Duck can decrease its actual nominal cost of trade credit by by paying late Grade It Now Save & Continue Continue without saving Chapter 14 Assignment Back to Assignment Attempts: Keep the Highest: 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. 36.85% Consider the following case Cold Duck Manufacturing Inc. buys on terms of 3/15, net 45 from its principa price of this invoice is $1,833.29 Y The supplier is willing to extend credit that exhibits a nominal annual cost of 37.60% 39.10% If Cold Duck receives an invoice f $1,88999, then the true 44.37% Suppose Cold Duck doesn't take the discount and instead chooses to pay its supplier five days' late-so that on average, Cold Duck will pay its supplier on the 50th day after the date of sale. As a result, Cold Duck can decrease its actual nominal cost of trade credit by by paying late Grade It Now Save & Continue Continue without saving Chapter 14 Assignment Back to Assignment Attempts: Keep the Highest: 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 Cold Duck Manufacturing Inc. buys on terms of 3/15, net 45 from its principal supplier. If Cold Duck receives an invoice for $1,889.99, then the true price of this invoice is $1,833.29 Y The supplier is willing to extend credit that exhibits a nominal annual cost of Suppose Cold Duck doesn't take the discount and instead chooses to pay its supplier five days' late-so that on average, Cold Duck will pay its supplier on the 50th day after the date of sale. As a result, Cold Duck can decrease its actual nominal cost of trade credit by by paying late Grade It Now Save & Continue Continue without saving Chapter 14 Assignment Back to Assignment Attempts: Keep the Highest: 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 Cold Duck Manufacturing Inc. buys on terms of 3/15, net 45 from its principal supplier. If Cold Duck receives an inve 12.54% 889.99, then the true price of this invoice is $1,833.29 Y 13.17% 14.4296 24.45% The supplier is willing to extend credit that exhibits a nominal annual cost of Suppose Cold Duck doesn't take the discount and instead chooses to pay its supplier five days' late-so that on aver uck will pay its supplier on the 50th day after the date of sale. As a result, Cold Duck can decrease its actual nominal cost of trade credit by by paying late Grade It Now Save & Continue Continue without saving Chapter 14 Assignment Back to Assignment Attempts: Keep the Highest: 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. 36.85% Consider the following case Cold Duck Manufacturing Inc. buys on terms of 3/15, net 45 from its principa price of this invoice is $1,833.29 Y The supplier is willing to extend credit that exhibits a nominal annual cost of 37.60% 39.10% If Cold Duck receives an invoice f $1,88999, then the true 44.37% Suppose Cold Duck doesn't take the discount and instead chooses to pay its supplier five days' late-so that on average, Cold Duck will pay its supplier on the 50th day after the date of sale. As a result, Cold Duck can decrease its actual nominal cost of trade credit by by paying late Grade It Now Save & Continue Continue without saving