What effective annual interest rate does the firm earn

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Reference no: EM13327018

A firm offers terms of 2/15, net 40. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculation, explain what will happen to this affective rate if:

a. The discount is change to 3 percent.

b. The credit period is increased to 60 days.

c. The discount period is decrease to 20 days.

d. What is the EAR for each Scenario?

Reference no: EM13327018

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