Owen was surprised when he calculated the percentage annual interest rate on his accounts payable. He discovered that failure to take advantage of the discount offered by suppliers
A) makes a small difference because a business does not pay a high interest rate.
B) makes a large difference because a business pays a high interest rate.
C) has no effect on cash flows.
D) will have erratic effects on rates for the use of a supplier's money.

Question

Quizplus · Accepted Answer

Failure to take advantage of the discount offered by suppliers can result in a high annual interest rate that a business has to pay, making a large difference in the amount owed. This is because the longer a business takes to pay off its accounts payable, the more interest it accumulates, resulting in a much larger payment in the long run.

Owen Was Surprised When He Calculated the Percentage Annual Interest