Credit Purchase Tk. 1,00,000 Terms 2/12, Net 30 EOM. B. Credit Purchase February 15, 2017, Tk. 50,000 Terms 2/10, Net EOM.

Credit purchase Tk. 1,00,000 terms 2/12, Net 30 EOM. b. Credit purchase February 15, 2017, Tk. 50,000 terms 2/10, Net EOM.

o calculate the Effective Interest Rate (EIR) (also known as Effective Annual Rate / EAR) for trade credit, we use the formula:

Where or .

a. Credit purchase Tk. 1,00,000 | Terms 2/12, Net 30 EOM

Discount Rate ():
Discount Period:
Net Credit Period:
Days Foregone (Borrowing Period):

Step-by-Step Calculation:

Periodic Rate:

EIR Calculation (using 360-day year):

EIR Calculation (using 365-day year):

(Note: The Nominal APR / Annual Cost of Trade Credit is )

b. Credit purchase February 15, 2017, Tk. 50,000 | Terms 2/10, Net EOM

Purchase Date: February 15, 2017
Net EOM (End of Month): February 28, 2017 (February 2017 has 28 days)
Total Credit Period:
Discount Period: (until Feb 25)
Days Foregone (Borrowing Period):

Step-by-Step Calculation:

Periodic Rate:

EIR Calculation (using 360-day year):

EIR Calculation (using 365-day year):

(Note: If your course assumes a standard 30-day net credit period for Net EOM regardless of month length, borrowing days would be , giving an EIR of 43.86%).

Summary of Final Answers:

Situation	Borrowing Days	Nominal APR (360 days)	EIR / EAR (360 days)	EIR / EAR (365 days)
a. Terms 2/12, Net 30	18 days	40.82%	49.79%	50.63%
b. Terms 2/10, Net EOM (Feb 15)	3 days	244.90%	1029.46%	1068.14%