Compute the annual percentage rate of the trade discount

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Reference no: EM131188496

You start work at a new firm and learn that? it's company policy to never take a trade discount. When you ask your boss about ?this, she says the firm needs the trade credit to avoid borrowing more money. You tell her it would be cheaper to borrow than to miss taking the discounts. She tells you to prove it. You learn that most of your suppliers offer terms of

2/20?,

net

45.

Assume the? firm's cost of borrowed funds is 13%.

Use a? 365-day year.

a. Compute the effective interest rate of the trade discount.

b. Compute the annual percentage rate of the trade discount.

c. Should the company take the trade? discount?

Reference no: EM131188496

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