Suppose You Purchase Goods on Terms of 1/10, Net 30

question 68

Multiple Choice

Suppose you purchase goods on terms of 1/10, net 30. Taking compounding into account, what annual rate of interest is implied by the cash discount? (Assume a year has 365 days.)

• A)9.6 percent
• B)9.2 percent
• C)20.1 percent
• D)44.6 percent