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Dovator [93]
3 years ago
7

Atlanta Cement, Inc. buys on terms of 2/15, net 30. It does not take discounts, and it typically pays 65 days after the invoice

date. Net purchases amount to $720,000 per year. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?
Business
1 answer:
shusha [124]3 years ago
5 0

Answer:

The nominal annual percentage cost of its non-free trade credit, based on a 365-day year is 0.2795%

Explanation:

The computation of the nominal annual percentage is shown below:

= Discount rate ÷ (100 - discount rate) × ({Total number of days ÷ payable days} - discount days)

= 2% ÷ ( 100 - 2%) × (365 days ÷ 65 days - 15 days)

= 2% ÷ (98% × 7.3)

= 2% ÷ 7.154

= 0.2795%

The net purchase amount is irrelevant. hence, this part is ignored

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