A firm buys on terms of 2/10, net 30, but generally does not pay until 40 days after the invoice date. The firm's purchases totaled 1,080,000 per year.
How much "non-free" trade credit does the firm use on average each year?
What is the approximate cost of the "non-free" trade credit?
a. 16.2%
b. 19.4%
c. 21.9%
d. 24.5%