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:

Credible

Worthy of belief or confidence; trustworthy and reliable.

Coalition Formation

The process of individuals or groups coming together to achieve a common goal or interest.

Assertiveness

A communication style characterized by confidence and directness in expressing one's opinions, needs, and desires, while respecting others.

Ingratiation

A psychological technique aimed at making oneself more likable to others through flattery or other forms of manipulation.