Unformatted text preview: $973.97. How many percentage points lower is the interest rate on the less expensive debt instrument? A. 0.0%; the rates are equal. B. 1.2% C. 1.0% D. 1.8% E 0.6% 3. Your firm buys on credit terms of 2/10, net 45, and it always pays on Day 45. If you calculate that this policy effectively costs your firm $157,500 each year, what is the firm's average accounts payable balance? A. $1,234,000 B. $ 75,000 C. $ 157,500 D. $ 625,000 E. $ 750,000 4. A firm is offered trade credit terms of 3/10, net 40. The firm does not take the discount, and it pays after 20 days (on day 30). Using a 360day year, what is the annual cost (on a nominal basis, not effective) of not taking this discount? A. 55.67% B. 57.67% C. 61.67% D. 53.67% E. 59.67%...
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 Spring '08
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 Finance, Economics, Interest Rate, Percentage point, trade credit terms

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