Tangshan Mining Has Extended Credit Terms of 3/15 Net 30

question 40

Multiple Choice

Tangshan Mining has 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%

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