The effective annual percentage cost of its non-free trade credit is 13.08%/
Here, we are to calculate the effective annual percentage cost.
Given Information
Discount % = 2%
Discount Days = 8
Net Days = 45
Actual days = 68
Nominal % cost = Disc. %/(100 – Disc. %) × (365/(Actual days – Disc. days)
Nominal % cost = 2 /(100 - 2) * 365/(68 -8)
Nominal % cost = 2 /98 * 365/60
Nominal % cost = 0.0204081 * 6.083333
Nominal % cost = 0.1241496
Nominal % cost = 12.41%
n = 365/(63 - 8) = 6.64
Effective annual rate = (1 + Nominal % rate/n)^ n – 1
Effective annual rate = (1 + 0.1241/6.64)^6.64 - 1
Effective annual rate = 1.13083302405 - 1
Effective annual rate = 0.13083302405
Effective annual rate = 13.08%
Read more about this here
brainly.com/question/13130639
