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

question 3

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)39.9%
• C)35.6%
• D)22.4%

---

Definitions:

Zerk Fitting

A standard grease nipple. Its orifice is sealed with a spring-loaded ball that unseats when pressurized grease is applied to it.

Grease Nipple

A fitting used on mechanical systems to feed lubricants under pressure into bearings, joints, or mechanical systems.

Types of Antifreeze

Various chemical formulations used to lower the freezing point and raise the boiling point of the coolant in engines.

Maintenance Scheduling

The process of planning and organizing maintenance activities in advance, including inspections, repairs, and replacements, to ensure equipment operates efficiently and downtime is minimized.