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Exercise 5-15(Algo) Cash discountsROI L.O 5-5 Annual credit sales of Nadak Company...

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Accounting

Exercise 5-15(Algo) Cash discountsROI L.O 5-5
Annual credit sales of Nadak Company total $320.3 million. The firm gives a 2.25% cash discount for payment within 10 days of the invoice date; 80% of Nadak's accounts receivable are paid within the discount period.
Required:
What is the total amount of cash discounts allowed in a year?
Calculate the approximate annual rate of return on investment that Nadak Companys cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year).

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