Mr. Hugh Warner is a very cautious businessman. His supplier offers trade credit terms of 3/11, net 85. Mr. Warner never takes the discount offered, but he pays his suppliers in 75 days rather than the 85 days allowed so that he is sure the payments are never late.What is Mr. Warner's cost of not taking the cash discount?Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Added by Patricia E.
Step 1
The terms "3/11, net 85" mean that Mr. Warner can take a 3% discount if he pays within 11 days; otherwise, the full invoice amount is due in 85 days. Show more…
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