Problem: A firm offers terms of 1/10, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculations, explain what will happen to this effective rate if:
1) The discount is changed to 2 percent.
2) The credit period is increased to 45 days.
3) The discount period is increased to 20 days.
4) What is the EAR for each scenario?