What Approximate Value Should a Firm Put on Being Able

question 141

Multiple Choice

What approximate value should a firm put on being able to permanently reduce the length of its collection period by 1 day if annual sales (all on credit) are $5,000,000 and the appropriate opportunity cost is 10% annually?

• A) $1,370
• B) $15,068
• C) $13,700
• D) $50,000

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Definitions:

Selling And Administrative Expense

Costs incurred that are not directly tied to the production of goods or services, including sales personnel salaries and office expenses.

Accounts Payable

The amounts a company owes to suppliers or creditors for goods and services received but not yet paid for.

February

The second month of the year in the Gregorian calendar, commonly associated with the shortest month of 28 days, except in a leap year when it has 29 days.

Cash Collections

The process or total amount of money received by a company from its customers for goods or services offered.