What is the effective annual cost of trade credit?

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Pets Sore Inc. sells on terms of 1/10, net 75. What is the effective annual cost of trade credit under these terms? Use a 365-day year. 

Oct 6th, 2015

Thank you for the opportunity to help you with your question!

 Cost of trade credit=  percentage Diuscount/ (100-percent of discount)*365/ credit period - discount period

 2/100-2

2/98 *365

 In this case  we are not provided with  credit and discount periods

 The annual cost of trade is 7.48%

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Oct 6th, 2015

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Oct 6th, 2015

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