What Is Meant by the Term '1

question 2

Multiple Choice

What is meant by the term '1.5/14 net 30'?

• A)If the invoice is paid within 14 days, a discount of 1.5 percent can be taken; otherwise the invoice is due in 30 days.
• B)If the invoice is paid right away, a discount of 14 percent can be taken; otherwise a discount of 1.5 percent can be taken if paid within the next 30 days.
• C)If the invoice is paid within 30 days, a discount of 14 percent can be taken; otherwise the invoice is due 14 days after that day.
• D)If the invoice is paid within 1.5 days, a discount of 14 percent can be taken; otherwise the invoice is due in 30 days.

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Definitions:

Contract Rate

The agreed-upon interest rate specified in a contract, such as a loan or bond, which determines the periodic interest payments.

Premium

An amount paid in excess of the nominal or face value, often in relation to insurance policies, bonds, or shares.

Effective Interest Rate

The actual return on an investment, taking into account the effect of compounding interest as opposed to the nominal rate.

Contract Interest Rate

The interest rate specified in a loan agreement or contract, typically fixed for the life of the loan.