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:

Pre-exploration Survey

The initial analysis or evaluation conducted to gather information about a possible mineral, oil, or gas site before starting exploration activities.

AASB 116

Refers to the Australian Accounting Standards Board Standard 116, which outlines the accounting treatment for property, plant, and equipment, emphasizing recognition, measurement after recognition, and depreciation.

Property, Plant and Equipment

Long-term tangible assets used in the operation of a business and not intended for immediate sale.

Removal and Restorations Costs

The expenses associated with dismantling and removing an asset, and restoring the site on which it was located.