T r ade C r edit Rates. Company X sells on a 1/20, net 60, basis. Customer Y buys goods with an invoice of $1,000.

a. How much can Company Y deduct from the bill if it pays on Day 20?

b. How many extra days of credit can Company Y receive if it passes up the cash discount?

c. What is the effective annual rate of interest if Y pays on the due date rather than Day 20?