Farwell Company Purchased Merchandise with an Invoice Price of $2,000

question 56

Multiple Choice

Farwell Company purchased merchandise with an invoice price of $2,000 and credit terms of 2/10, n/30.Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms?

• A)4%
• B)24%
• C)36%
• D)72%

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Definitions:

Financial Manager

A person responsible for managing the financial health of an organization, ensuring efficient financial planning, and overseeing investment activities.

Responsibility

The obligation to act ethically and accountably in roles or tasks assigned to an individual or organization.

Primary Market

A marketplace where issuers sell new securities directly to investors for the first time.

Public Offering

The sale of equity shares or other financial instruments to the public for the first time.