Owen Was Surprised When He Calculated the Percentage Annual Interest

question 86

Multiple Choice

Owen was surprised when he calculated the percentage annual interest rate on his accounts payable. He discovered that failure to take advantage of the discount offered by suppliers

• A) makes a small difference because a business does not pay a high interest rate.
• B) makes a large difference because a business pays a high interest rate.
• C) has no effect on cash flows.
• D) will have erratic effects on rates for the use of a supplier's money.

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Definitions:

Free Rider

A person who enjoys the advantages of goods, services, or resources without bearing the expenses associated with them.

Public Good

A product or service that is made available to all members of a society, characterized by being non-excludable and non-rivalrous in consumption.

FM Radio Station

A broadcast station that uses frequency modulation to provide radio programming to the public within a certain geographic area.

Excludable

A feature of a product or service that enables the owner to restrict its use by others without obtaining consent.