Question: Terms of trade credit are 3/1 5, net 1 20. You have a partially used line of credit with the bank against which you can draw money at an interest rate of 15 percent. Rank the following three alternative actions regarding payment in order of their desirability. Also show the relevant implied annual interest rates for funds used in each of the cases indicated:
- Payment on 15th day
- Payment after 60 days
- Payment after 120 days