Question

Heidi Muir, a sporting goods wholesaler, purchased goods from a supplier for $3,400. The

Answer 1

Answer:

56.44%

Step-by-step explanation:

From the question, we have the following values

% Discount = 3%

Full allowed payment days = 30 days

Discount days = 10 days

1 year = 365 days

The formula for Effective Annual rate or Annual rate in effect =

Discount %/(1-Discount %) x (365 days/(Full allowed payment days - Discount days))

= 3%/(1 - 3%) × (365 days/30 days - 10 days)

= 0.03/(1 - 0.03) × (365/20)

= 0.03/0.97 × (365/20)

= 0.5644329897

Converting to percentage

0.5644329897 × 100

= 56.44329897%

Approximately = 56.44%

Therefore, the annual rate Heidi, in effect, is paying the supplier if she fails to pay the invoice at the end of the discount period is 56.44%