Ningbo Steel Was Extended Credit Terms of 3/15 Net 30

question 3

Multiple Choice

Ningbo Steel was extended credit terms of 3/15 net 30. If the firm were able to stretch its accounts payable to 60 days without damaging its credit rating, the cost of giving up the cash discount would only be

• A) 18.81%
• B) 18.25%
• C) 21.90%
• D) 25.09%

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Definitions:

Psychological Need

An intrinsic motive or desire that drives individuals to pursue goals or activities that fulfill emotional or mental requirements.

Comfort Or Luxury

Products or services designed to provide an enhanced level of ease, well-being, or indulgence beyond basic necessities.

Self-preservation

The instinctual behavior to protect oneself from harm or danger.

Psychological Reasons

Underlying mental or emotional factors that influence an individual's decisions or behaviors.