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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Definitions:

Behavioral Contrast

The change in the strength of one response occurring in the context of the changed reinforcement conditions for an alternative response.

Lashley-Wade Model

A theoretical framework for understanding how behavior is learned and modified, although not widely recognized, it suggests a focus on experimental analysis of behavior.

Discrimination Training

The process of reinforcing a response to a specific stimulus while not reinforcing responses to similar stimuli, thereby teaching the subject to differentiate between the stimuli.