Question

Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller.

Consider this case:

Cold Duck Manufacturing Inc. buys on terms of 3.5/15, net 60 from its chief supplier.

If Cold Duck receives an invoice for $1,254.98, what would be the true price of this invoice?

$968.85

$1,211.06

$1,089.95

$1,695.48

The nominal annual cost of the trade credit extended by the supplier is_______ ,assuming a 365-day year.( 29.44%,36.51%,32.97%,24.44%)

Suppose Cold Duck does not take advantage of the discount and then chooses to pay its supplier late—so that on average, . On average, Cold Duck will pay its supplier on the 65th day after the sale. As a result, Cold Duck can decrease its nominal cost of trade credit by(5.44, 2.94,5.00,5.73) by paying late.

Answer 1