Chasteen Hall Currently Has 55 Days in Its Cash Cycle

question 25

Multiple Choice

Chasteen Hall currently has 55 days in its cash cycle and 131 days in its operating cycle.The firm purchases its inventory from one supplier.This supplier has offered a 5 percent discount to The Switch Back if it will pay for its purchases within 10 days instead of the normal 32 days.If the Switch Back opts to take advantage of the discount offered,its new operating cycle will be _____ days and its new cash cycle will be _____ days.

• A)109; 32
• B)109; 77
• C)131; 32
• D)131; 77
• E)153; 77

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Definitions:

Foreign Purchases Effect

The decrease in domestic demand for goods and services as a result of consumers buying goods from foreign markets, usually due to price or currency exchange advantages.

Interest Rate Effect

The interest rate effect describes how changes in the central bank's interest rate influence the economy by affecting consumer spending and investment.

Entropy Effect

In thermodynamics, it refers to the measure of disorder or randomness in a system; metaphorically used in various fields to describe chaos or decline.

Classical Economists

Economists from the 18th and 19th centuries who believed in free markets, limited government intervention, and self-regulating economies.