Determine what the annual interest rate would be, Financial Accounting

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Determine what the annual interest rate would be

Problem

1) Swifty Ltd.'s main supplier offers it credit terms of 1/10, n/45 on its purchases. Because cash ?ow is tight for Swifty, the compa ny's CFO is trying to determine what the annual interest rate would be if the company passes up this discount and pays at the end of the 45-day cred it period instead.

2) Also, if Swifty can access a short-term loan with interest of 7%, which would provide it with the funds to take advantage of the purchase discount, should it do so?

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Financial Accounting: Determine what the annual interest rate would be

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Financial Accounting: Determine what the annual interest rate would be

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