I\'m lost. Company X sells on a 115, net 90. basis. Company Y buys goods with an

Question

I'm lost.

Company X sells on a 115, net 90. basis. Company Y buys goods with an invoice of $6.000 a. How much can company Y deduct from the bil fit pays on day 15? (Do not round intermediate calculations.) Discount b. How many extra days of credit can company Y receive if t passes up the cash discount? Number of days days c. What is the effective annual rate of interest if Y pays on the due date rather than cay 15? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Efective annual rate

Explanation / Answer

a)Discount =Discount rate * Amount

               = .01 * 6000

              = $ 60

b)Number of days = 90-15 = 75 days

c)Effective annual rate of interest = [Discount rate /(100-Discount rate)] *[365/extra days]

                                = [1 /(100-1)] *[365/75]

                               =[1/99] * [365/75]

                              = .010101*4.86667

                              = .0492 or 4.92%

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