What Effective Annual Rate of Interest Is Being Charged to a Customer

question 54

Multiple Choice

What effective annual rate of interest is being charged to a customer who is granted credit terms of 3/15,net 45 when the customer foregoes the discount and pays on the last date prior to being delinquent?

• A) 44.86%
• B) 48.29%
• C) 37.67%
• D) 41.84%

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Definitions:

Autonomous Net Taxes

Taxes that are not influenced by economic activity levels, operating independently of the economy's output.

Expansionary Gap

A condition where an economy's actual gross domestic product is higher than its long-run potential, leading to upward pressure on prices.

Government Purchases

Spending on products and services by all levels of government, not including transfer payments.

Unemployment Insurance

A government program that provides financial assistance to workers who have lost their jobs through no fault of their own.