Your Company Has Been Offered Credit Terms of 4/30,net 90

question 65

Multiple Choice

Your company 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:

Contract of Purchase

A legally binding agreement between parties for the sale and purchase of goods, services, or property.

Specific Goods

Items that are identified and agreed upon at the time a contract of sale is made, distinct from generic or interchangeable goods.

Point of Delivery

The specific location or moment when the transfer of goods or services from a seller to a buyer is considered complete.

Competition Act

Legislation aimed at preventing anti-competitive practices in the marketplace, protecting consumers and ensuring fair trade.