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A firm that stretches its payables gains an extra 1 month beforeit needs to pay for its purchases of raw materials but it loses a2%

A firm that stretches its payables gains an extra 1 month beforeit needs to pay for its purchases of raw materials but it loses a2% discount for prompt payment. This is like borrowing at aneffective annual interest rate of:

Multiple Choice

  • 19.40%

  • 27.43%

  • 24.00%

  • 26.53%

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