Tangshan Mining Was Extended Credit Terms of 3/15 Net 30

question 20

Multiple Choice

Tangshan Mining was extended credit terms of 3/15 net 30 EOM.The cost of giving up the cash discount,assuming payment would be made on the last day of the credit period,would be ________.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)70.99%;14.25%
• B)70.99%;15.25%
• C)73.26%;20.09%
• D)73.26%;25.09%
• E)none of the above

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Definitions:

Nondischargeable Debts

Financial obligations that cannot be eliminated through bankruptcy proceedings, such as certain taxes, fines, and student loans.

Child Support Payments

Financial contributions made by a non-custodial parent to assist in the upbringing of their children.

Chapter 13 Bankruptcy

A type of bankruptcy that involves a repayment plan of three to five years, as governed by U.S. bankruptcy law.

Regular Incomes

Consistent earnings generated typically on a daily, weekly, or monthly basis, often from employment or investments.