Heidi Muir, a sporting goods wholesaler, purchased goods from a supplier for $3,400. The supplier offers a 3% discount if the invoice is paid within 10 days; if not paid within 10 days, the
full amount must be paid within 30 days of the invoice date. Use the formula to find the annual
rate Heidi, in effect, is paying the supplier if she fails to pay the invoice at the end of the discount
period

56.44%

Step-by-step explanation:

From the question, we have the following values

% Discount = 3%

Full allowed payment days = 30 days

Discount days = 10 days

1 year = 365 days

The formula for Effective Annual rate or Annual rate in effect =

Discount %/(1-Discount %) x (365 days/(Full allowed payment days - Discount days))

= 3%/(1 - 3%) × (365 days/30 days - 10 days)

= 0.03/(1 - 0.03) × (365/20)

= 0.03/0.97 × (365/20)

= 0.5644329897

Converting to percentage

0.5644329897 × 100

= 56.44329897%

Approximately = 56.44%

Therefore, the annual rate Heidi, in effect, is paying the supplier if she fails to pay the invoice at the end of the discount period is 56.44%

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