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Calculate the implied annualized "interest rate" (rounded to the nearest whole percentage point) associated with the...

Calculate the implied annualized "interest rate" (rounded to the nearest whole percentage point) associated with the credit term 1/20 net 60? Round to the nearest percentage (Example of correct format of the answer: 11%)

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Answer #1

Credit term: 1/20 net 60

Thus,

Discount rate (D) = 1%

Full Period(T) = 60 days

Discount Period (t)= 20 days

Without Discount Period (T-t) = 60-20 = 40 days

days in a year = 365

Implied Annualized interest rate (i):

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