FIN 534 RANK Imagine Your Future /fin534rank.com FIN 534 RANK Imagine Your Future /fin534rank.com | Page 171
Average accounts payable = $25,000
a. 120.6 days
b. 126.9 days
c. 133.6 days
d. 140.6 days
e. 148.0 days
5. Affleck Inc.'s business is booming, and it needs to raise more capital.
The company purchases supplies on terms of 1/10 net 20, and it
currently takes the discount. One way of getting the needed funds would
be to forgo the discount, and the firm's owner believes she could delay
payment to 40 days without adverse effects. What would be the effective
annual percentage cost of funds raised by this action? (Assume a 365-
day year.)
a. 10.59%