What effective annual interest rate does the firm earn

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Question: A firm offers terms of 2/20, net 45.

a. What effective annual interest rate does the firm earn when a customer does not take the discount? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Effective annual interest rate %

b. What effective annual interest rate does the firm earn if the discount is changed to 3 percent? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Effective annual interest rate %

c. What effective annual interest rate does the firm earn if the credit period is increased to 65 days? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Effective annual interest rate %

d. What effective annual interest rate does the firm earn if the discount period is increased to 25 days? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Effective annual interest rate %

Reference no: EM131975388

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