Blueroot Inc

question 71

Multiple Choice

Blueroot Inc.is considering a change in its financing policy.Currently, it uses maximum trade credit by not taking discounts on its purchases.The standard industry credit terms offered by all its suppliers are 2/10 net 30 days, and the firm pays on time.The new CFO is considering borrowing from its bank, using short-term notes payable, and then taking discounts.The firm wants to determine the effect of this policy change on its net income.Its net purchases are $11,760 per day, using a 365-day year.The interest rate on the notes payable is 10%, and the tax rate is 25%.If the firm implements the plan, what is the expected change in net income?

• A) $41,202
• B) $43,370
• C) $45,657
• D) $48,060
• E) $50,463

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Definitions:

Office Furnishings

Items and accessories used to equip an office space, including desks, chairs, and decor.

Modular Units

Components or parts that are designed to be standardized and interchangeable, facilitating ease of assembly, flexibility, and customization.

FAB Sequences

Stands for Features, Advantages, and Benefits; a sales technique that links product features to their advantages and the benefits for the customer.

Preparation

The process of getting ready for a specific event, activity, or undertaking by planning and arranging the necessary components.