What Effective Interest Rate Is Charged to a Purchaser Receiving

question 54

Multiple Choice

What effective interest rate is charged to a purchaser receiving terms of 5/10, net 90 if the purchaser avoids the discount and pays in 90 days?

• A)20.00%
• B)22.81%
• C)24.93%
• D)26.37% 5/95 = 5.26% implicit interest for 80 days.

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