Effective costs of trade credit to nondiscount customers

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Reference no: EM13929440

Cost of Trade Credit

Grunewald Industries sells on terms of 3/10, net 50. Gross sales last year were $4,131,000, and accounts receivable averaged $482,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate sales/day based on a 365-day year; then get average receivables of discount customers; then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places.

Nominal cost %

Effective cost %

Reference no: EM13929440

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