Instruction 19

question 43

Multiple Choice

Instruction 19.1: Use the information to answer the following question(s) .
Sunny Manufacturing Systems Inc. is supplied with plastic chips for their plastic injection molding manufacturing process. Their supplier, Sun Chemical, Inc. offers financing terms of a 2% discount if the accounts payable are paid in 10 days or less with the full balance due in 45 days. Short-term financing available to Sunny Manufacturing is available at an annual rate of 9.6%. Sunny Manufacturing has just purchased $400,000 of plastic chips from Sun Chemical.
-Refer to Instruction 19.1. What is the effective annual interest cost of supplier financing offered by Sun Chemical?

• A)7.3%
• B)9.5%
• C)10.4%
• D)22.9%

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Definitions:

Nearest 0.01%

Rounding a number or percentage to the closest hundredth of a percent for precision.

Emotions

Complex psychological states involving physiological arousal, feelings, cognitive processes, and behavioral reactions.

Feedback System

A process or mechanism by which information about the outcomes of actions is returned to the originator, enabling adjustment or improvement of future actions.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome.