[mjbey1s]

I also have one more I cannot figure out. These are from the recently released AICPA questions.

A company wants to approximate the 12% annual interest rate based on a 365-day year it pays on its working capital loan. Which of the following terms should the company offer its customers?

A) 2%, 15, net 45

B) 1%, 15, net 45

C) 0.75%, 10, net 30

D) 0.50%, 10, net 30

They say the answer is B……does anyone know why?!

[Kelleyzt32]

360/(45-15) X .01/(1-.01) = 12%

According to Becker expect a problem using this formula on the exam

REG - 91
FAR - 86
BEC - 84
AUD - July 2016

[golfball7773]

Memorize the formula:

360 or if stated 365/ (pay period-discount period) * discount %/(1-discount %)

FAR: 63, 55, 62
REG: 65, 77*
AUD: Fail, 64, 71
BEC: 72, 74, 81

*expired

[mjbey1s]

Thanks. I was able to get to the calculation for all 4 answers. I know the formula like the back of my hand. I just didn't know why B was the answer.

Then I saw that in the question it states that the company want's to approximate 12%!!!! makes sense why B is right now!!!

[sboimov]

I was stuck on this problem as well.

Do you have to work through each possible answer until you get 12% or is there another way to do this?

[Author]

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