What are nominal and effective costs of trade credit

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Reference no: EM132044550

Cost of Trade Credit

Grunewald Industries sells on terms of 3/10, net 30. Gross sales last year were $4,477,500 and accounts receivable averaged $412,500. 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 daily sales based on a 365-day year, calculate the average receivables for discount customers, and 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: EM132044550

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