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Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and...

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Finance

Newsome Inc. buys on terms of 4/10, net 45. It does not take thediscount, and it generally pays after 55 days. What is theeffective (not nominal) annual percentage cost of its non-freetrade credit, based on a 365-day year? Enter your answer rounded totwo decimal places. Do not enter % in the answer box. For example,if your answer is 0.12345 or 12.345% then enter as 12.35 in theanswer box.

Answer & Explanation Solved by verified expert
3.9 Ratings (740 Votes)
Solution The formula for calculating the Effective annual percentage Cost of non free Trade Credit is 1 Discount rate 1 Discount Rate n 1 Where n No    See Answer
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Transcribed Image Text

Newsome Inc. buys on terms of 4/10, net 45. It does not take thediscount, and it generally pays after 55 days. What is theeffective (not nominal) annual percentage cost of its non-freetrade credit, based on a 365-day year? Enter your answer rounded totwo decimal places. Do not enter % in the answer box. For example,if your answer is 0.12345 or 12.345% then enter as 12.35 in theanswer box.

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