Which of the Following Strategies Would Continue to Be Effective

question 78

Multiple Choice

Which of the following strategies would continue to be effective if a cash-strapped firm determines that the effective interest rate charged on trade credit is lower than the bank's interest rate?

• A) Take the discount but pay after the discount period.
• B) Borrow from the bank and take the discount.
• C) Ignore the discount, pay at the end of the period.
• D) Take the discount and hope for longer payment float.

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Definitions:

Perfect Tender Rule

a legal principle under the UCC that requires sellers to deliver goods that exactly meet the terms of the contract with the buyer.

Substantial Performance

A legal principle allowing a party to enforce a contract if they have fulfilled enough of its terms to warrant payment, even if there are minor breaches.

Entry Conflict

The initial disagreement or discord that arises when entering a new situation, group, or environment, often due to differing expectations or norms.

Employee's Entry

The process or event of a new employee joining an organization, including orientation and integration into the workplace.