{"id":204399,"date":"2025-03-21T19:04:30","date_gmt":"2025-03-21T19:04:30","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=204399"},"modified":"2025-03-21T19:04:33","modified_gmt":"2025-03-21T19:04:33","slug":"gild-company-has-been-offered-credit-terms-of-3-10-net-30","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/21\/gild-company-has-been-offered-credit-terms-of-3-10-net-30\/","title":{"rendered":"Gild Company has been offered credit terms of 3\/10, net 30"},"content":{"rendered":"\n<p>Gild Company has been offered credit terms of 3\/10, net 30. Using a 365-day year, what is the nominal cost of not taking advantage of the discount if the firm pays on the 35th day after the purchase?<\/p>\n\n\n\n<p>14.2%<br>32.2%<br>37.6%<br>45.2%<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>To calculate the nominal cost of not taking advantage of the discount, we use the following formula:<\/p>\n\n\n\n<p>[<br>\\text{Cost of Trade Credit} = \\frac{\\text{Discount %}}{1 &#8211; \\text{Discount %}} \\times \\frac{365}{\\text{Days beyond discount period}}<br>]<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Identify Given Information<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Credit Terms<\/strong>: 3\/10, net 30 \u2192 This means a <strong>3% discount<\/strong> is available if paid within <strong>10 days<\/strong>, otherwise, the full amount is due in <strong>30 days<\/strong>.<\/li>\n\n\n\n<li><strong>Payment Date<\/strong>: The firm pays on <strong>day 35<\/strong>, which is <strong>25 days after the discount period (35 &#8211; 10 = 25 days)<\/strong>.<\/li>\n\n\n\n<li><strong>Discount<\/strong> = 3% or <strong>0.03<\/strong>.<\/li>\n\n\n\n<li><strong>Days beyond discount period<\/strong> = <strong>25 days<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Apply the Formula<\/h3>\n\n\n\n<p>[<br>\\text{Cost of Trade Credit} = \\frac{0.03}{1 &#8211; 0.03} \\times \\frac{365}{25}<br>]<\/p>\n\n\n\n<p>[<br>= \\frac{0.03}{0.97} \\times 14.6<br>]<\/p>\n\n\n\n<p>[<br>= 0.03093 \\times 14.6<br>]<\/p>\n\n\n\n<p>[<br>= 0.4516 \\text{ or } 45.2\\%<br>]<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>The <strong>nominal cost of not taking the discount<\/strong> is <strong>45.2%<\/strong>, which is the correct answer. This means the firm is effectively paying an annualized interest rate of <strong>45.2%<\/strong> by delaying payment instead of taking advantage of the 3% discount. This is a high cost, so if the firm has the cash available, it should take the discount and pay early.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gild Company has been offered credit terms of 3\/10, net 30. Using a 365-day year, what is the nominal cost of not taking advantage of the discount if the firm pays on the 35th day after the purchase? 14.2%32.2%37.6%45.2% The correct answer and explanation is : To calculate the nominal cost of not taking advantage [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-204399","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/204399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=204399"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/204399\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=204399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=204399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=204399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}