Taylor Textbooks Inc

question 114

Multiple Choice

Taylor Textbooks Inc.buys on terms of 2/15, net 50 days.It does not take discounts, and it typically pays on time, 50 days after the invoice date.Net purchases amount to $450,000 per year.On average, what is the dollar amount of costly trade credit (total credit − free credit) the firm receives during the year? (Assume a 365-day year, and note that purchases are net of discounts.)

• A) $43,151
• B) $45,308
• C) $47,574
• D) $49,952
• E) $52,450

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Definitions:

End of the Year

The conclusion of a fiscal or calendar year, marking a period for financial reporting, assessment, and strategy formulation for businesses.

Maturity

The date on which the principal amount of a loan, bond, or other financial instrument must be repaid to creditors.

Maker

In the context of finance, refers to the entity that issues or creates a financial instrument, such as a check or note.

Maturity Value

Maturity value is the amount payable to an investment's holder at its maturity date, including the principal and any remaining interest.