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What are the nominal and effective costs of trade credit

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Q1) What are the nominal and effective costs of trade credit under the credit terms of 1/10, net 40? Assume a 365-day year. Do not round intermediate calculations. Round your answers to two decimal places.

Q2) A large retailer obtains merchandise under the credit terms of 2/15, net 30, but routinely takes 55 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM133005115

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