A Firm Offers Credit Terms of 1/5, Net 15

question 12

Multiple Choice

A firm offers credit terms of 1/5, net 15. What is the effective annual rate on the credit extended if a customer foregoes the discount on a $2,000 purchase?

• A) 27.70%
• B) 31.23%
• C) 36.00%
• D) 44.31%
• E) 47.98%

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Definitions:

User Generated Content

Content created and shared by consumers or users of a platform, rather than by brands or official publishers, often reflecting authenticity.

Real-Time Marketing

Marketing practices that involve responding quickly to current events or audience interactions, leveraging trends and immediate feedback.

Message Internalization

The process by which an individual integrates and accepts communicated information into their own belief system.

Earned Reach

The exposure a brand gains through word-of-mouth or viral sharing, as opposed to paid advertising or owned media.