Credit terms 2/10 net 45 & cost of failing?

Came across a question asking for the implicit cost of failing to pay creditors within 45 days… The credit terms were 2/10 net 45 The possible answers were something like 18%, 20%, 22%, 24%, (ish!) Sorry I can’t be more specific but I’m fairly sure this is all the info that is necessary to answer… Really I don’t know what to do with this? Thanks a lot


(1 + disc/1-disc)^(365/n-disc days)


ditchdigger2CFA Wrote: ------------------------------------------------------- > (1 + disc/1-disc)^(365/n-disc days) Forgot to subtract 1 at the end :wink:

Lol! True

Good question!