C+ Notes' Business Is Booming, and It Needs to Raise

question 50

Multiple Choice

C+ Notes' business is booming, and it needs to raise more capital.The company purchases supplies from a single supplier on terms of 1/10, net 20, and it currently takes the discount.One way of getting the needed funds would be to forgo the discount, and C+'s owner believes she could delay payment to 40 days without adverse effects.As an alternative, C+ could borrow from its bank at a rate of 12 percent, annual compounding, but with discount interest.Additionally, the bank would require a compensating balance of 20 percent of the loan amount.What is the difference between the EARs of the two financing sources?

• A)4.83%
• B)5.25%
• C)7.60%
• D)9.44%
• E)12.12%

Comprehend the processes and legal conditions around negotiation, indorsement, and transferral of negotiable instruments as per UCC.

Recognize the effects of irregularities and the importance of terms in the validity of becoming a holder in due course.

Identify and understand the distinctions between different types of indorsements and their legal implications.

Understand how executory promises relate to value in the context of negotiable instruments.

---

Definitions:

Double-checked

The process of verifying accuracy or correctness a second time to ensure no errors have been made.

Perceptual Tricks

Techniques used to manipulate or influence the audience's perception, often employed in marketing, magic, or design.

Nonverbal Message

Communication without words, which can include gestures, facial expressions, and body language.

Distribution Method

The strategy or process used to deliver a product or service to the consumer or business user.