Suppose your firm buys $100 worth of supplies on credit with terms 3/10 n30.
a. What does "3/10 n30" mean?
b. If you pay the bill on the 9thday after the purchase, what is the cost of the trade credit you have used for the 9-day period?
c. If you pay the bill on the 30thday after the purchase, what is the cost of the trade credit you have used for the 20-day period after the discount period ended?
3. If your firm buys $100 worth of supplies on credit with terms 3/10 n30 and pays the bill on the 30thday after the purchase:
a. What is the approximate, or "nominal," cost of trade credit as an annual rate?
b. What is the exact cost of trade credit as an annual rate?