Cost of trade credit a large retailer obtains merchandise, Financial Management

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Cost of trade credit a large retailer obtains merchandise

Cost of Trade Credit A large retailer obtains merchandise under the credit terms of 3/10, net 40, but routinely takes 50 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume 365 days in year for your calculations.

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Financial Management: Cost of trade credit a large retailer obtains merchandise

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