Credit terms 2/10 net 45 & cost of failing?

[guest123]

Came across a question asking for the implicit cost of failing to pay creditors within 45 days...
The credit terms were 2/10 net 45

The possible answers were something like 18%, 20%, 22%, 24%, (ish!)

Sorry I can't be more specific but I'm fairly sure this is all the info that is necessary to answer...
Really I don't know what to do with this?

Thanks a lot

 

[map1]

(1+0.02/0.98)^(365/(45-10))-1=23.45%

 

[ditchdigger2CFA]

(1 + disc/1-disc)^(365/n-disc days)

 

[guest123]

great

 

[bpdulog]

ditchdigger2CFA Wrote:
-------------------------------------------------------
> (1 + disc/1-disc)^(365/n-disc days)

Forgot to subtract 1 at the end

 

[ditchdigger2CFA]

Lol! True

 

[waddi08]

Good question!