What effective annual interest rate does the firm earn when a customer does not

Question

What effective annual interest rate does the firm earn when a customer does not take the discount? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

What effective annual interest rate does the firm earn if the discount is changed to 3 percent? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

What effective annual interest rate does the firm earn if the credit period is increased to 65 days? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

What effective annual interest rate does the firm earn if the discount period is increased to 20 days? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

1)Effective annual interest rate that the firm earn when a customer does not take the discount = 2*(365/30)

= 24.33%

..

2)Effective annual interest rate that the firm earn if the discount is changed to 3 percent = 3*(365/30)

= 35.50%

..

3)Effective annual interest rate that the firm earn if the credit period is increased to 65 days = 2*(365/50)

= 14.60%

..

4)Effective annual interest rate that the firm earn if the discount period is increased to 20 days = 2*(365/25)

= 29.20%

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.