What is the borrowing rate for a firm that is offered terms of sale of 3/12, net 60 that does not take advantage of the discount?
A)3.0%
B)15.9%
C)16.5%
D)22.8%

Question

Quizplus · Accepted Answer

The borrowing rate can be calculated using the formula: [(Discount % / (100 - Discount %)) * (360 / (Full allowed payment days - Discount days))]. Substituting the given values: [(3 / (100 - 3)) * (360 / (60 - 12))] = 22.8%.

What Is the Borrowing Rate for a Firm That Is