If an Invoice for $45,000 Is Billed 2/10 Net 30

question 187

Multiple Choice

If an invoice for $45,000 is billed 2/10 net 30, what is the highest annual interest rate that one would rationally pay to borrow money in order to take advantage of the cash discount if the only consideration is a lower annual interest rate than charged on the invoice?

• A)71.9 percent
• B)9.9 percent
• C)17.9 percent
• D)23.9 percent
• E)35.9 percent

Understand the impact of inventory valuation errors on financial statements and their corrections.

Grasp the relationship between inventory management and a company's liquidity and operational efficiency.

Understand the importance of choosing the appropriate inventory valuation method.

Learn the differences among FIFO, LIFO, and weighted average inventory valuation methods.

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