Sam’s Supply Hut offers credit terms to all of its customers of 1.5/10 net 30. The company only sells boxes of frozen specialty caviar. Because of the difficulty in obtaining caviar, customers are limited to only one carton per order and the cost per carton is $25,000.
a) What is the cash discount price?
b) What is the implicit interest rate are Sam’s customers paying if they do not take advantage of the cash discount?
c) What is the APR (the annual percentage rate) that customers are paying if they do not take advantage of the cash discount?