Question

A firm buys on terms of 2/8, net 45 days, it does not

A firm buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 58 days. What is the effective annual percentage cost of its non-freetrade credit? (Use a 365-day year.)

a) 15.89%
b) 19.86%
c) 19.70%
d) 17.64%
e) 13.19%

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