Instruction 20.1: Use the Information to Answer Following Question(s)

question 13

Multiple Choice

Instruction 20.1:
Use the information to answer following question(s) .
Jackson Automotive Inc. of California agrees to sell specialized automotive parts to Hidatsi of Korea. Because the two companies have never done business with each other, Jackson requires a banker's acceptance as payment for the $1,000,000 order. The banker's acceptance carries a 1.4% commission per annum and payment is to be received in 6 months. If Jackson Inc. chooses to discount or sell the bankers acceptance to its bank, the discount rate is 1.00% per annum.
-Refer to Instruction 20.1. What is the size of the discount (not including the commission fee) Jackson must take for receiving the proceeds of the sale today rather than waiting for six months?

• A) $7,000
• B) $5,000
• C) $12,000
• D) $14.000

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Definitions:

Hydrogen Ions

Positively charged ions (protons) of hydrogen, H+, which play a significant role in acid-base balance and cellular metabolism.

Plasma Membrane

A bi-layer of lipids and proteins that surrounds a cell, controlling the movement of substances in and out of the cell.

Electrons

Negatively charged subatomic particles that orbit the nucleus of an atom.

Electron Transport Chain

A sequence of structures that move electrons from donors to acceptors through oxidation-reduction processes, simultaneously facilitating the movement of hydrogen ions across a membrane.