With Terms of 4/15,net 60,what Is the Implied Interest Rate

question 104

Multiple Choice

With terms of 4/15,net 60,what is the implied interest rate for forgoing a cash discount and paying at the end of the period?

• A) 25.63%
• B) 28.19%
• C) 39.25%
• D) 61.15%

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Definitions:

Accounts Payable

Liabilities of a business representing amounts owed to creditors for goods and services received but not yet paid for.

Noncash Transactions

Financial activities that do not involve the transfer of cash, including depreciation, stock-based compensation, and asset exchanges, but impact the financial statements.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity, within a specific period.

Financing Activities

These are transactions that result in changes in the size and composition of the equity capital or borrowings of the company, often reported in the cash flow statement.