Answer:
15.8%
Step-by-step explanation:
The computation of the effective annual interest rate is shown below:
Given that
Discount Rate = 1%
Discount Period = 10 days
Credit Period = 35 days
Now based on the above information
The Effective Annual Rate is
= [1 + Discount Rate ÷ (1 - Discount Rate)]^[365 ÷ (Credit Period - Discount Period)] - 1
= [1 + 0.01 ÷ (1 - 0.01)]^[365 ÷ (35 - 10)] - 1
= [1 + 0.01 ÷ 0.99]^[365 ÷ 25] - 1
= 15.8%