Use the Information Below to Answer the Following Question(s)

question 12

Multiple Choice

Use the information below to answer the following question(s) :
A retailer operating a network of home improvement stores has annual sales of $800 million,
annual cost of goods and materials purchased of $500 million,and net income of $125 million.
-If a newly implemented strategic sourcing process is able to reduce the cost of goods and materials purchased by 15 percent,what would be the new net profit,given that annual sales and other costs remain unchanged?

• A)$150 million
• B)$175 million
• C)$200 million
• D)$250 million

---

Definitions:

Higher Rate

A term that generally indicates a rate (of interest, tax, etc.) that is above the normal or average level.

Capital Goods

Long-term assets that are used in the production of other goods and services, such as buildings, machinery, and equipment, which are not consumed in the production process.

Borrows

refers to the act of obtaining money, goods, or services in exchange for a promise of future repayment.

Financial System

A network of institutions, markets, instruments, and mechanisms that facilitate the exchange of funds and the allocation of resources in an economy.