Reston Inc

question 151

Multiple Choice

Reston Inc.has expected sales of $17,000,000.While 10 percent of its customers pay cash,the remaining 90 percent pay on credit with 40 percent paying on Day 10,30 percent paying on Day 20,15 percent paying on Day 25,and 15 percent paying on Day 30.Assume that the cost of funds invested in receivables is 10 percent.Suppose that the firm's customers begin paying later,such that the new DSO increases to 24 days,that the firm uses a 360-day year,and that the firm's variable cost ratio is 80 percent.What is the additional interest cost to Reston of the additional investment in A/R caused by the delay in payment by its customers?

• A) $19,550
• B) $24,438
• C) $42,500
• D) $78,625
• E) $102,000

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Definitions:

Inner Conflicts

Psychological struggles within an individual, stemming from opposing desires, beliefs, or needs.

Ethical Principles

The foundational concepts in ethics guiding moral conduct, including principles like autonomy, beneficence, nonmaleficence, and justice.

Obedience

The act of following commands or instructions, often given by an authority figure or system.

Relational Aggression

A form of aggression in which harm is caused through manipulation or damage to someone's relationships or social status.