Which Formula Below Best Expresses the Real Interest Rate, (R)

question 109

Multiple Choice

Which formula below best expresses the real interest rate, (r) ?

• A) i = r - e
• B) r = i + e
• C) r = i - e
• D) e = i + r

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Definitions:

Credit Policy

The guidelines a company follows to determine the amount and terms of credit to extend to customers.

Net Sales

The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and discounts.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects its receivables or the speed of debt collection from customers.

Average Account Receivables

The average amount of money owed to a company by its customers for goods or services delivered on credit.