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Sparta Pty (Ltd) purchases an average of R100 000 of inventory from its supplier on an annual basis. The credit terms of the supplier

  

Sparta Pty (Ltd) purchases an average of R100 000 of inventory from its supplier on an annual basis. The credit terms of the supplier is 2.5/15 net 45 and is strictly enforced. The cost of other short-term financing options (such as the bank overdraft) has an effective annual rate of 17%. What will the nominal annual cost of credit be for Sparta if they follow the policy of paying for the purchases on the latest date allowed? a. 31,20% - Rather make use of other financing option at an effective annual rate of 17% b. 31,20% - Make use of the policy of paying for purchases at the latest date allowed rather than making use of other financing options. c. 25,35% - Make use of the policy of paying for purchases at the latest date allowed rather than making use of other financing options. d. 30,10% Rather make use of other financing option at an effective annual rate of 17%

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