Freeman Builders, Inc

question 103

Multiple Choice

Freeman Builders, Inc.buys on terms of 2/15, net 30.It does not take discounts, and it typically pays 60 days after the invoice date.Net purchases amount to $720,000 per year.What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

• A) 10.86%
• B) 12.07%
• C) 13.41%
• D) 14.90%
• E) 16.55%

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Definitions:

Category Killer

A large retail store specializing in a particular product category, dominating the market and often driving smaller retailers out of business.

General Merchandise Store

Retail establishments offering a wide range of products from various categories including clothing, housewares, and groceries.

Value Outlet

A retail store that offers products at lower prices by reducing overhead costs and offering goods that provide value for money.

Focused Merchandise Stores

Retail outlets that specialize in a specific type of product or market niche, aimed at catering to specific customer needs.