Sam Wainwright Is a New Accountant with Ground Floor Company

question 115

Essay

Sam Wainwright is a new accountant with Ground Floor Company.Ground Floor purchased merchandise on account for $18,000.The credit terms are 1/10, n/30.Sam has talked with the company's banker and knows that he could earn 4% on any money invested in the company's savings account.
Instructions
(a) Should Sam pay the invoice within the discount period or should he keep the $18,000 in the money market account and pay at the end of the credit period? Support your recommendation with a calculation showing which action would 1.(b) If Sam forgoes the discount, it may be viewed as paying an interest rate of 1% for the use of $18,000 for 20 days.Calculate the annual rate of interest to which this is equivalent.

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Definitions:

Central Nervous System

The main part of the nervous system, consisting of the brain and the spinal cord, which is responsible for processing information and controlling bodily functions.

Anorexia Nervosa

An eating disorder characterized by an intense fear of gaining weight and a distorted body image, leading to severe food restriction.

ANAD

National Association of Anorexia Nervosa and Associated Disorders, an American nonprofit organization dedicated to the prevention and relief of eating disorders.

Sexual Addiction

A compulsive, repetitive behavior where an individual engages in sexual activities as a way to manage stress or emotional distress, often leading to negative consequences.