Frankie's Furniture Mart Has Contracts from One Customer Who Will

question 185

Multiple Choice

Frankie's Furniture Mart has contracts from one customer who will pay $4,695 in 5 months and another customer who will pay $7,830 in 7 months. Frankie can sell the contracts today to Vinnie's finance company at a discount rate of 23.5%. How much money will Vinnie pay to Frankie today for the two contracts?

• A) $11,162
• B) $11,208
• C) $12,525
• D) $13,705
• E) $14,058

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Definitions:

Major Categories

General classifications used in various contexts, such as financial accounting, to organize items or concepts into distinct groups based on similar characteristics.

Total Inventory

The sum value of all types of inventory a company holds, including raw materials, work-in-progress, and finished goods.

Gross Profit Ratio

A financial metric that shows the portion of sales revenue that exceeds the cost of goods sold, indicating efficiency in production and sales.

Loss on Purchase Commitments

A financial loss that occurs when a company commits to purchasing goods at a certain price but the market value of these goods decreases before the purchase is completed.