Question: In this question, you will have to compute the effective annual cost of trade credit. Suppose a firm is offered the following: the terms are

In this question, you will have to compute the effective annual cost of trade credit. Suppose a firm is offered the following: the terms are 0.9/9 net 30.

What is the annualized interest cost?

Note: As this is a somewhat tough question, it has been set to accept answers within 5% of the correct solution rather than the standard 1%.

Express your answer as a percentage, for example 3.18% should be entered as 3.18 without the percentage sign.

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