Andrews Corporation Buys on Terms of 2/8, Net 45 Days

question 72

Multiple Choice

Andrews Corporation buys on terms of 2/8, net 45 days, it does not take discounts, and it actually pays after 58 days.What is the effective annual percentage cost of its non-free trade credit? (Use a 365-day year.)

• A) 14.34%
• B) 15.10%
• C) 15.89%
• D) 16.69%
• E) 17.52%

---

Definitions:

Exceptions

Conditions or cases that do not follow the general rule or definition.

Mathematical Principles

Fundamental truths or propositions that form the basis for a system of mathematics.

True

In accordance with fact or reality, not false.

Proposition

A contention that represents a judgment or point of view.