Question: Problem 1: Interpret the following credit term 1/10, net 35, what is the effective annual rate? Problem 2: The average price of your product is

Problem 1:

Interpret the following credit term 1/10, net 35, what is the effective annual rate?

Problem 2:

The average price of your product is $619 per unit with a $435 variable cost per unit. The monthly interest rate is 1.8 percent. Your experience tells you that 9 percent of these customers will never pay their bill. Should you offer credit terms to attract these potential customers if they are one time customers? Should you offer credit terms to attract these potential customers if they are repeat customers?

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