A Firm Offers Its Customers 3/5 Net 25

question 46

Multiple Choice

A firm offers its customers 3/5 net 25. What is the cost of trade credit to a customer who chooses to pay on day 25?

• A) 32.3%
• B) 65.5%
• C) 68.4%
• D) 74.3%

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Definitions:

Arbitrage Profit

Earnings realized from buying and selling the same asset in different markets to take advantage of differing prices for the same asset.

Corn Future Contract

A standardized legal agreement to buy or sell corn at a predetermined price at a specified time in the future, used as a financial instrument for speculation or hedging.

Spot Price

The current market price at which an asset can be bought or sold for immediate delivery.