Question: A firm offers terms of 2/20, net 45.
a. What effective annual interest rate does the firm earn when a customer does not take the discount? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Effective annual interest rate %
b. What effective annual interest rate does the firm earn if the discount is changed to 3 percent? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Effective annual interest rate %
c. What effective annual interest rate does the firm earn if the credit period is increased to 65 days? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Effective annual interest rate %
d. What effective annual interest rate does the firm earn if the discount period is increased to 25 days? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Effective annual interest rate %