Company Has Been Offered Credit Terms of 4/30, Net 90

question 121

Multiple Choice

company has been offered credit terms of 4/30, net 90 days.What will be the nominal annual percentage cost of its non-free trade credit if it pays 120 days after the purchase? (Assume a 365-day year.)

• A)16.05%
• B)16.90%
• C)17.74%
• D)18.63%
• E)19.56%

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Definitions:

Durable Power

A legal document that grants someone the authority to act on another's behalf in legal or financial matters, continuing in effect even if the grantor becomes incapacitated.

Incapacitated

Refers to the state where an individual or entity is legally unable to make their own decisions due to mental or physical disability.

Partially Disclosed

Refers to a situation where some but not all relevant information has been revealed.