What Is the Effective Annual Cost of Credit Terms of 2/20

question 32

Multiple Choice

What is the effective annual cost of credit terms of 2/20 net 60, if the firm stretches the accounts payable to 80 days?

• A)13.1%
• B)34.2%
• C)21.1%
• D)6.4%

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Definitions:

Organisation-Development Process

A strategic, planned effort to increase an organization's effectiveness and viability.

Consultant

A professional who provides expert advice in a particular area, such as business, education, law, regulatory compliance, finance, healthcare, and more.

Client

An entity that pays for or receives the services or advice of a professional or company.

Unfreezing

This is the first stage in the change process, making individuals or organizations aware of the need for change to overcome resistance.