Ningbo Steel Was Extended Credit Terms of 3/15 Net 30

question 39

Multiple Choice

Ningbo Steel was extended credit terms of 3/15 net 30 EOM.The cost of giving up the cash discount, assuming payment would be made on the last day of the credit period, is 75.26 percent.If the firm were able to stretch its accounts payable to 60 days without damaging its credit rating, the cost of giving up the cash discount would only be

• A)18.81%
• B)18.25%
• C)21.90%
• D)25.09%
• E)none of the above

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