The nominal and effective costs of trade credit

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Reference no: EM131522150

Grunewald Industries sells on terms of 1/10, net 40. Gross sales last year were $4,836,000, and accounts receivable averaged $478,500. 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: EM131522150

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