What Effective Interest Rate Is Charged to a Purchaser Receiving

question 93

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%

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Definitions:

Grice's Maxim

A set of conversational principles proposed by philosopher H.P. Grice that include quantity, quality, relation, and manner, aiming to make communication effective and cooperative.

Quantity

Specifies the amount or number of a material or immaterial in numerical terms, indicating how much there is of something.

Quality

The standard or degree of excellence of something, often measured against similar things.

Relation

The way in which two or more concepts, objects, or people are connected, or the state of being connected.