MoJo Corporation Purchases Goods on Credit with Terms of 4

question 23

Multiple Choice

MoJo Corporation purchases goods on credit with terms of 4.5/15, net 40. Which of the following is the annual cost (APR) of the non-free trade credit if the firm pays on Day 40 (i.e., the cost of forgoing the discount) ? In your computations, assume there are 360 days in a year. 

• A)42.41%
• B)67.85%
• C)0.00%
• D)30.84%
• E)113.09%

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Definitions:

Prior Probabilities

The likelihoods of different outcomes or events before new evidence is considered, used in Bayesian statistics.

Posterior Probabilities

The probabilities assigned to hypotheses or outcomes after taking into consideration the relevant evidence and the prior probabilities.

Malignant Cyst

A type of growth or tumor that can invade surrounding tissues and spread to other parts of the body, considered cancerous.

Benign Cyst

A non-cancerous cyst that is generally not life-threatening and can occur in various parts of the body, often not requiring removal unless it causes discomfort.