What Is the Effective Cost of Credit Terms of 3/5

question 16

Multiple Choice

What is the effective cost of credit terms of 3/5 net 45 if the firm stretches the accounts payable to 60 days?

• A) 12.9%
• B) 35.6%
• C) 39.9%
• D) 22.4%

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Definitions:

Direct Instruction

A teaching method that is structured, sequenced, and led by teachers, involving explicit teaching of specific skills or concepts.

High Expectations

The anticipation of a high level of performance or achievement from someone or something, which can motivate or pressure.

Social Development

The process by which individuals learn to interact with others and navigate the social structures of their community, encompassing changes in social behavior, relationships, and understanding of societal norms.

Montessori

An educational approach developed by Maria Montessori emphasizing independence, freedom within limits, and respect for a child’s natural psychological, physical, and social development.