Cost of trade credit and bank loan -lamar lumber buys 8, Ask an Expert

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Cost of Trade Credit and Bank Loan -

Lamar Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 30; and it currently pays after 5 days and takes discounts. Lamar plans to expand, which will require additional financing. Assume 365 days in year for your calculations.

I found that the additional credit they will receive if they take the discount to be 547945.2, How do I find the nominal cost of the credit and the effective cost of credit?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91622330

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