- +1-530-264-8006
- info@tutorsglobe.com

Advantage of the cash discount terms

Problem:

Trade Credit Rates - What effect will the following actions have on the implicit interest rate charged to customers that pass up the cash discount? State the effective annual interest rate for these terms.

Discuss why a buyer would want to maybe borrow money to be able to take advantage of the cash discount terms rather than wait and pay the non discount invoice total when net is due.

a) the terms are changed to 1/10, net 20

b) the terms are changed to 1/10, net 30

c) the terms are changed to 1/5, net 10

d) the terms are changed to 2/10 Dec 10 net Dec 30, anticipation ½% per month

e) net 30

Now Priced at $20 (50% Discount)

Recommended **(91%)**

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment
## Q : Examine the concept of time value of money

Examine the concept of time value of money. Analyze why it is important for accountants to have an understanding of compound interest and annuities