Sharon's new leather jacket: Time value of money and calculation of rate of interest.

Sharon buys a new leather jacket on credit. The cost of the jacket is $500 and has to be fully paid within 30 days.

But if she pays within 7 days she has to pay only $495.

Calculate the implicit annual rate of interest of the above transactions.

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...are not getting any incentive to pay earlier.

In the current problem if Sharon decides to avail the discount, she would pay on the 7th day otherwise she ...