What is effective annual rate of interest

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Reference no: EM131558500

Company X sells on a 1/25,net 60, basis. Customer Y buys goods with an invoice of $5,000.

A. How much can company Y deduct from the bill if it pays on day 25?

Discount    $___________

B. How many extra days of credit can company Y receive if it passes up the cash discount?

Number of days _____________ days

C. What is the effective annual rate of interest if Y pays on the due date rather than day 25? ( Use 365 days in a year.

Do not round intermediate calculations. Enter your answer as a percent rounded 2 decimal places.

Effective Annual Rate _____________%

Reference no: EM131558500

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