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

question 71

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%
• E)42.7%

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Definitions:

Explanation

An explanation is the process of making something clear or understandable, often by elaborating on how and why something occurs or is the way it is.

Strength

The degree to which the premises of an inductive argument support the conclusion.

Explanandum

The phenomenon or event that is explained by a scientific theory or hypothesis.

False

Refers to something that is not in accordance with truth or fact.