How do you calculate the effective annual cost of trade credit?

How do you calculate the effective annual cost of trade credit? What is the formula for the effective annual cost of trade credit? Divide 360, nominal days in a year, by the sum of full allowed payment days (30 days) minus allowed discount days (10 days). It equals 18. Multiply the result of 2.0408% by … Continue reading How do you calculate the effective annual cost of trade credit?