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Problem 16-09 Cost of Trade Credit Grunewald Industries sells on terms of 3/10, net 30. Gross sales last...

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Finance

Problem 16-09
Cost of Trade Credit

Grunewald Industries sells on terms of 3/10, net 30. Gross saleslast year were $4,247,000 and accounts receivable averaged$457,500. Half of Grunewald's customers paid on the 10th day andtook discounts. What are the nominal and effective costs of tradecredit to Grunewald's nondiscount customers? (Hint:Calculate daily sales based on a 365-day year, calculate theaverage receivables for discount customers, and then find the DSOfor the nondiscount customers.) Do not round intermediatecalculations. Round your answers to two decimal places.

Nominal cost%
Effective cost%

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Problem 16-09Cost of Trade CreditGrunewald Industries sells on terms of 3/10, net 30. Gross saleslast year were $4,247,000 and accounts receivable averaged$457,500. Half of Grunewald's customers paid on the 10th day andtook discounts. What are the nominal and effective costs of tradecredit to Grunewald's nondiscount customers? (Hint:Calculate daily sales based on a 365-day year, calculate theaverage receivables for discount customers, and then find the DSOfor the nondiscount customers.) Do not round intermediatecalculations. Round your answers to two decimal places.Nominal cost%Effective cost%

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