Answer:
The answer is $53,699
Explanation:
Discount = 2%
Discount days = 15 days
Net days = 40 days
Gross purchase is $800,000 per year
Discount on the purchase is $16,000(2% of $800,000)
Therefore net purchase is $784,000($800,000 - $16,000).
Net per day is:
Net purchase ÷ 365 days
$784,000 ÷ 365 days
= $2,147.95
Total trade credit = Net per day x Net days
$2,147.95 x 40 days = $85,918
Free credit = Net per day ×Discount days
=$2,147.95 x 15= $32,219
Therefore, Costly trade credit = Total credit −Free credit
$85,918 - $32,219
= $53,699
