A firm buys on terms of 2/10, net 30, but generally does not pay until 40 days after the invoice date. Its purchases total P1,080,000 per year. What is the approximate cost of the "non-free" trade credit? A. 21.9% B. 24.5% C. 16.2% D. 19.4%
Added by Jenna W.
Step 1
Step 1: Calculate the cost of trade credit using the formula: Cost of trade credit = (Discount % / (1 - Discount %)) x (365 / (Credit period - Discount period)) Show more…
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