Sheet Co. purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.)

A firm buys on terms of 3/15, net 45. It does not take the discount, and it generally pays after 60 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

A firm offers terms of 2/15, net 60.

What effective annual interest rate does the firm earn when a customer does not take the discount?

What effective annual interest rate does the firm earn if the discount is changed to 3 percent?

What effective annual interest rate does the firm earn if the credit period is increased to 80 days?

What effective annual interest rate does the firm earn if the discount period is increased to 20 days?

Assume a trade creditor offers you terms of 2/10 net 40.

A)What is the effective annual cost of forgoing the discount?

B)If the firm=s bank charges 14% on loans, would you take the trade credit discount?