A firm offers terms of 3/7, net 30. What effective annual interest rate does the

Question

A firm offers terms of 3/7, net 30.

What effective annual interest rate does the firm earn when a customer does not take the discount?(Use 365 days a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What effective annual interest rate does the firm earn if the terms are changed to 4/7, net 30, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What effective annual interest rate does the firm earn if the terms are changed to 3/7, net 45, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What effective annual interest rate does the firm earn if the terms are changed to 3/12, net 30, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

%  

Only one i need is anwser "B". I cannot seem to figure it out and i have sent it to here and no one has yet to get it right. Please help, Thanks.

A firm offers terms of 3/7, net 30.

Explanation / Answer

a. A customer earn 3% discount for 23 Days (30-7).

So, effective annual interest rate is: 365 / 23 x 3 = 47.61%

b. Effective Interest that firm earn = 365 / 23 x 4 = 63.48%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.