Building Credit Cost into Prices

daisiewishes

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Sep 22, 2008
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Your company sells products for cash only but is now thinking of offering credit to allow customers a 90 day period to pay. To do this, the company has to borrow money at an interest rate of 12%, daily compunding based on a 360 day year. You want to increase your prices just enough to offset the bank interest . What percent should should you raise your prices?
 
daisiewishes said:
Your company sells products for cash only but is now thinking of offering credit to allow customers a 90 day period to pay. To do this, the company has to borrow money at an interest rate of 12%, daily compunding based on a 360 day year. You want to increase your prices just enough to offset the bank interest . What percent should should you raise your prices?

Please share with us your thoughts/work - so that we know where to begin to help you.

What is the daily interest rate?

What do get after compounding?
 
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