Answer:
10.52%
Explanation:
The computation of the annual financing cost is shown below:
First we have to calculate the interest cost that is shown below:
= $20,000 × 10% × 182 days ÷ 365 days
= $997.26
Now the used funds is
= $20,000 - $997.26
= $19,003
Now the annual financing cost is
= ($997 ÷ $19,003) × (365 days ÷ 182 days)
= 10.52%
We assume there are 365 days in a year
