Your Firm Buys on Credit Terms of 2/10, Net 45

question 90

Multiple Choice

Your firm buys on credit terms of 2/10, net 45, and it always pays on day 45.If you calculate that this policy effectively costs your firm R157,500 each year, what is the firm's average accounts payable balance?

• A) R1,234,000
• B) R75,000
• C) R157,500
• D) R625,000
• E) R750,000

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