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What are the nominal and effectivecosts of trade credit

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Reference no: EM132079902

Grunewald Industries sells on terms of 2/10, net 40. Gross sales last year were$4,562,500 and accounts receivable averaged $437,500. Half of Grunewald's customerspaid on the 10th day and took discounts.

What are the nominal and effectivecosts of trade credit to Grunewald's nondiscount customers?

(Hint: Calculate sales/day based on a 365-day year, then calculate average receivables of discount customers,and then find the DSO for the nondiscount customers.

Reference no: EM132079902

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