Use the Information to Answer the Following Question(s)

question 25

Multiple Choice

Use the information to answer the following question(s) .
SureDrip Irrigation Systems Inc. is supplied with plastic chips for their plastic injection molding manufacturing process. Their supplier, Sun Chemical, Inc. offers financing terms of a 2% discount if the accounts payable are paid in 10 days or less with the full balance due in 45 days. Short-term financing available to SureDrip is available at an annual rate of 9.6%. SureDrip has just purchased $400,000 of plastic chips from Sun Chemical.
-Refer to Instruction 18.1.What is the effective annual interest cost of supplier financing offered by Sun Chemical?

• A)7.3%
• B)9.5%
• C)10.4%
• D)22.9%

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Definitions:

Access Capital

The ability of a business or individual to obtain funds or resources needed for investment purposes.

Innovative Ideas

Novel and creative thoughts or concepts that have the potential to bring about change or solve problems.

First-mover Advantage

The competitive advantage gained by the initial significant occupant of a market segment.

Niche

A specialized segment of the market for a particular kind of product or service.