question archive Your company has been offered credit terms of 4/30, net 90 days
Your company has been offered credit terms of 4/30, net 90 days
Subject:FinancePrice:2.86 Bought3
Your company has been offered credit terms of 4/30, net 90 days. What will be the nominal annual percentage cost of its non-free trade credit if it pays 120 days after the purchase? Assume a 365-day year. (5 points)
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Nominal percentage cost= Discount percent / 100 - discount percent × (365/ Actual days - discount days)
= 4 / 100 - 4 × (365 / 120 - 30)
= 4 / 96 × (365 / 90)
= 0.041667 × 4.05556
= 0.16898 or 16.90%
