Financial Management: Theory & Practice
Financial Management: Theory & Practice
15th Edition
ISBN: 9781337248006
Author: Eugene F. Brigham; Michael C. Ehrhardt
Publisher: Cengage Learning US
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Chapter 16, Problem 8Q
Summary Introduction

To discuss: Whether it is true, “most of the companies are ready to acquire some trade credit that extra credit is commonly offered, however at a price”.

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What’s the difference between free trade credit and costly tradecredit?
How does the cost of costly trade credit generally compare with the cost of shorttermbank loans?
What is the difference between free trade credit and costly trade credit? What is theformula for finding the nominal annual cost of trade credit? Does the nominal costof trade credit understate the effective cost? Explain.
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Debits and credits explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=n-lCd3TZA8M;License: Standard Youtube License