Arnold Inc

question 52

Multiple Choice

Arnold Inc.purchases merchandise on terms of 2/10 net 30, and it always pays on the 30th day.The CFO calculates that the average amount of costly trade credit carried is $375, 000.What is the firm's average accounts payable balance? (Assume a 365-day year.)

• A) $458, 160
• B) $482, 273
• C) $507, 656
• D) $534, 375
• E) $562, 500

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Definitions:

Profit-Maximizing Firm

A business entity's objective of adjusting production and sales to achieve the highest possible profit levels.

Wage Rate

The amount of money a worker is paid per unit of time, such as an hour or a month.

Marginal Cost

The cost related to the production of an additional unit of a product or service.

Price Taker

A seller (or buyer) that is unable to affect the price at which a product or resource sells by changing the amount it sells (or buys).