What Is the Effective Annual Cost of Credit Terms of 1/10

question 17

Multiple Choice

What is the effective annual cost of credit terms of 1/10 net 30, if the firm stretches the accounts payable to 45 days?

• A) 8.49 %
• B) 10.91%
• C) 11.05%
• D) 18.03%

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Definitions:

Debt Collectors

Individuals or companies engaged in recovering owed money on behalf of themselves or others.

FTC Act

The Federal Trade Commission Act, which established the FTC to prevent unfair competition and protect consumers from anticompetitive, deceptive, and unfair business practices.

Anticompetitive Practices

Business actions that reduce or prevent competition in a market, often scrutinized under competition laws.

FDCPA

The Fair Debt Collection Practices Act, U.S. legislation aimed at promoting fair debt collection and providing guidelines for the conduct of debt collectors.