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

question 44

Multiple Choice

Tangshan Mining 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, would be ________. 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) 72.99%; 18.81%
• B) 72.99%; 18.25%
• C) 75.25%; 21.90%
• D) 75.26%; 25.09%

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Definitions:

Prime Vacant Land

Land in a highly coveted location that is undeveloped and offers great potential for investment, construction, or development due to its desirable characteristics.

Enforceable Contract

A legal agreement between parties that is valid under the law and therefore can be upheld in a court of law.

Legal Consideration

Legal consideration involves something of value that is exchanged between parties in a contract, making the agreement legally enforceable.

Lease Option

A contract that permits a party to lease real property while holding an option to purchase that property.