Find the nominal cost of non free trade credit
a. If a firm buys under terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its non free trade credit?
b. Does it receive more or less credit than it would if it paid within 15 days?
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Kava Inc. manufactures industrial components. One of its products, which is used in the construction of industrial air conditioners, is known as K65. Data concerning this product are given below
Calculate the nominal annual cost of non free trade credit under each of the following terms. Assume payment is made either on the due date or on the discount date.
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If a firm buys under terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its non free trade credit?
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