In This Problem,use the Approximation Formula to Find the Cost

question 58

Multiple Choice

In this problem,use the approximation formula to find the cost of trade credit.A firm's payments policy calls for stretching payments to its supplier,who sells on terms of 3/20,net 60.Payment is made in 90 days,and the cash saved is invested in a money market mutual fund paying 12 percent interest.This policy is __________ because the firm has a net __________.

• A) Profitable; gain of about 9 percent on the funds involved.
• B) Profitable; gain of about 12 percent on the funds involved.
• C) Unprofitable; loss of about 4 percent on the funds involved.
• D) Unprofitable; loss of about 9 percent on the funds involved.
• E) Insufficient information to solve.

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Definitions:

Sequencer File

A digital file that contains data for controlling a sequence of operations in automated processes.

Shift Register

A shift register is a digital memory circuit used to store and shift its content in a specific direction, typically used in serial communication or data processing tasks.

Sequencer Instruction Mask

A technique or parameter used in programming sequencers to define which bits or pieces of data within a sequence are relevant for specific instructions or conditions.