Compute for the nominal annual cost of not taking discount

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Question 1: A company is offered trade credit terms of 3/15, net 45 days. The company does not take the discount, and it pays after 67 days. Compute for the nominal annual cost of not taking the discount.

Option 1: 24.52%

Option 2: 22.07%

Option 3: 22.95%

Option 4: 21.71%

Question 2: Alexis Corporation purchases on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 30 days after the invoice date. Net purchases amount to $730,000 per year. On average, what amount of "free" trade credit does Alexis Corporation receive during the year (using 365 days)?

Option 1: $30,000

Option 2: $50,000

Option 3: $70,000

Option 4: $60,000

 

Reference no: EM132898684

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