Lima Corporation Makes Purchases on Credit with Terms of 2/15

question 17

Multiple Choice

Lima Corporation makes purchases on credit with terms of 2/15, net 45. What is the effective annual rate (rEAR) of non-free trade credit if Lima does not take discounts and pays on Day 45? In your computations, assume there are 360 days in a year. 

• A)42.98%
• B)24.49%
• C)148.21%
• D)35.40%
• E)27.43%

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