A large retailer obtains merchandise under the credit terms of 1/15, net 45, but routinely takes 60 days to pays its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What it the retailer's effective cost of trade credit?
A chain of appliance stores, APP Corporation, purchases inventory with a net price of $500,000 each day. The company purchases the inventory under the credit terms of 2/15, net 40. APP always takes the discount but takes the full 15 days to pay its bills. What is the average account payable for APP?