A Firm Buys on Terms of 2/8,net 45 Days,it Does

question 115

Multiple Choice

A firm buys on terms of 2/8,net 45 days,it does not take discounts,and it actually pays after 85 days.What is the effective annual percentage cost of its non-free trade credit? (Use a 365-day year. )

• A) 10.05%
• B) 10.55%
• C) 7.84%
• D) 8.64%
• E) 9.55%

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Definitions:

Canadian Tire

A Canadian retail company that sells a wide range of automotive, hardware, sports and leisure, and home products.

Contract Labour

Workers employed on a contractual basis rather than as permanent employees, often for a specific project or time period.

Core Knowledge Workers

Employees who possess essential expertise and skills critical to the functioning and competitiveness of an organization.

Strategic Value

The worth or importance of something in achieving a business's long-term objectives and sustaining its competitive advantage.