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Burka [1]
3 years ago
15

Buskirk Construction buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days afte

r the invoice date. Net purchases amount to $650,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year, and note that purchases are net of discounts.)a. $31,253b. $27,781c. $31,788d. $26,712e. $22,705
Mathematics
1 answer:
Sergeeva-Olga [200]3 years ago
8 0

Answer:

option (d) 26,712

Step-by-step explanation:

Data provided in the question:

Terms for buying = 2/15, net 60 days

Net purchases amount = $650,000 per year

Now,

Per credit cycle purchase = Net purchases amount × [ 60 ÷ 365 ]

= $650,000 × 0.16438

= $106,849.315

Free trade per credit cycle = Per credit cycle purchase × [ 15 ÷ 60 ]

= $106,849.31 ÷ 0.25

= $26,712.33 ≈ $26,712

Hence,

The correct answer is option (d) 26,712

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