The Company You Just Started Has Been Offered Credit Terms

question 105

Multiple Choice

The company you just started 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:

Expenditure

The act of spending funds or disbursing money for various purposes such as operations, investments, or consumption.

GDP Per Person

A measure of a country's economic output that accounts for its number of people, indicating average economic productivity per person.

Life Expectancy

The average number of years a person is expected to live, based on current mortality rates and health conditions.

Literacy Rates

The percentage of people within a given population who are capable of reading and writing at a specified age.