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

question 65

Multiple Choice

Your 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:

Goodwill Calculation

The process used to assess the premium paid over the fair market value of the assets during the acquisition of a company.

Form 20-F

A form used by foreign companies to report their financial performance and operational activities to the U.S. Securities and Exchange Commission.

Annual Report

A comprehensive report on a company's activities and financial performance throughout the preceding year.

U.S. Stock Exchange

The U.S. Stock Exchange refers to any of the various stock exchanges operating in the United States where stocks of publicly held companies are bought and sold, such as the New York Stock Exchange (NYSE) and NASDAQ.