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I'm trying to study for a test. Here's one of the practice problems. I think I would need to use the formula for Effective Annual Rate:
A firm offers terms of 2/15, net 30. Currently, two-thirds of all customers take advantage of the trade discount; the remainder pay bills at the due date.
a. What will be the firm’s typical value for its accounts receivable period?
b. What is the average investment in accounts receivable if annual sales are $20 million?
c. What would likely happen to the firm’s accounts receivable period if it changed its terms
to 3/15, net 30?
I have the formula for EAR as (1 + discount/discount price)365/extra days credit -1.
I think I am doing the formula incorrectly. Help?
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Effective Annual rate- A/R and Trade Discounts 
