What is the nominal and effective cost of trade credit under the credit terms of 2/15, net 30? Assume 365 days in a year for your calculations. Round your answers to two decimal places. Do not round intermediate calculations.
Nominal vs Effective Interest Rate:
The nominal interest rate on a loan is quoted as the periodic rate multiplied by the number of periods. This rate is usually smaller than the true (or effective) interest rate because the periodic rate is typically compounded during the year, which results in a higher annual interest rate.
Answer and Explanation:
The buyer can receive a 2% discount if it makes payment within 15 days. Otherwise, the total price is due on day 30. If the buyer foregoes the...
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fromChapter 7 / Lesson 6