The Lasser Company Needs to Finance an Increase in Its

question 18

Multiple Choice

The Lasser Company needs to finance an increase in its working capital for the coming year.Lasser is reviewing the following three options: (1) The firm can borrow from its bank on a simple interest basis for one year at 13 percent.(2) It can borrow on a 3-month,but renewable,loan at a 12 percent simple rate.The loan is a simple interest loan,completely paid off at the end of each quarter,then renewed for another quarter.(3) The firm can increase its accounts payable by not taking discounts.Lasser buys on credit terms of 1/30,net 60 days.What is the effective annual cost (not the approximate cost) of the least expensive type of credit,assuming 360 days per year?

• A) 13.0%
• B) 12.82%
• C) 11.46%
• D) 12.12%
• E) 12.55%

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Definitions:

Organizational Politics

The activities and behaviors individuals engage in within a workplace to gain power, influence decisions, and achieve personal or group goals.

Political Skill

The ability to effectively understand and influence others in a manner that enhances personal or organizational objectives.

Job Performance

An employee's effectiveness in fulfilling the assigned tasks or objectives within their job role.

Political Activity

Involvement in activities intended to influence public policy and leadership, such as voting, advocacy, or campaigning for a political party.