What Is the Effective Annual Cost of Credit Terms of 3/15

question 63

Multiple Choice

What is the effective annual cost of credit terms of 3/15 net 30,if the firm stretches the accounts payable to 60 days?

• A)1.7%
• B)3.35%
• C)12.65%
• D)28.03%
• E)17.42%

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Definitions:

IRS

Internal Revenue Service, the federal agency responsible for administering and enforcing tax laws in the United States.

Form 1040 Schedule C

A tax form used in the United States for reporting income or loss from a business operated as a sole proprietorship.

Company's Accounts

The various financial records and statements that reflect a company's economic transactions, assets, liabilities, and equity.

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