Virginia Supply Offers Their Customers Trade Credit with Terms 2/15

question 138

Multiple Choice

Virginia Supply offers their customers trade credit with terms 2/15 net 30. This implies that:

• A) Virginia's customers have very little incentive to pay within the discount period.
• B) paying within 30 days will let a customer deduct 15% off the invoice price.
• C) most customers will pay their bill within 2 days in order to take the maximum discount.
• D) the annual financing cost of failing to pay within 15 days is about 48%.

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Definitions:

Framing

The way an issue is posed; how an issue is framed can significantly affect decisions and judgments.

Framing

The way information is presented or an issue is structured, which can influence perception and decision-making.

Belief Perseverance

The psychological phenomena wherein individuals maintain their beliefs despite facing contradicting evidence or facts.

Representativeness Heuristic

The representativeness heuristic is a mental shortcut that involves judging the likelihood of an event by comparing it to an existing prototype in our minds.