CyberAge Outlet, a relatively new store, is a café that offers
customers the opportunity to browse the Internet or play computer
games at their tables while they drink coffee. The customer
pays a fee based on the amount of time spent signed on to the
computer. The store also sells books, tee shirts, and computer
accessories. CyberAge has been paying all of its bills on the last
day of the payment period, thus forfeiting all supplier discounts.
Shown below are data on CyberAge’s two major vendors, including
average monthly purchases and credit terms.
||Average monthly purchases
||5/10, net 90
Assuming a 360-day year and that CyberAge continues
paying on the last day of the credit period, the company’s
weighted-average annual interest rate for trade credit (ignoring
the effects of compounding) for these two vendors is