Your Company Has Been Offered Credit Terms on Its Purchases

question 46

Multiple Choice

Your company has been offered credit terms on its purchases of 4/30, net 90 days. What will be the nominal annual cost of trade credit if your company pays on the 35th day after receiving the invoice? (Assume a 365-day year.)

• A) 30%
• B) 304%
• C) 3%
• D) 87%
• E) 156%

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Definitions:

Entrance Exams

Standardized tests used by educational institutions to assess an individual's readiness or qualification for admission.

Cognitive Biases

Systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.

Irrational

Not logical or reasonable; based on faulty reasoning or emotions.

Value Education

The process by which people give moral values to others, aiming to shape their behavior and understanding of moral issues.