corporate finance-II

bhuyanpk
Good Student
Posts: 14
Joined: Sat Aug 08, 2015 12:12 pm

corporate finance-II

Postby bhuyanpk » Thu Aug 27, 2015 3:36 am

Shaw Corporation purchased a product from Martinez Corporation for $10,000, terms 3/10, net/60.
What is the effective interest rate (round to 2 decimal places) associated with these terms?
A. 22.56%
B. 21.91%
C. 16.86%

how this question is related to corporate finance and where in corporate finance we have studied this.I mean based on which concept in corporate fiance this question is put.Going by the notation i can infer that this is realated to trade credit discounting.but if you solve it that way answers are not matching

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: corporate finance-II

Postby edupristine » Thu Aug 27, 2015 6:18 am

This question belongs to topic "working capital Management".


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