Use the information to answer the following question(s).
SureDrip Irrigation 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 SureDrip is available at an annual rate of 9.6%. SureDrip has just purchased $400,000 of plastic chips from Sun Chemical.
-Refer to Instruction 18.1.What is the amount of money SureDrip will save on accounts payable if they accept the discount?
A)$400,000
B)$8,000
C)$33,333
D)$20,000

Question

Quizplus · Accepted Answer

If SureDrip pays the accounts payable within 10 days, they will receive a 2% discount on the $400,000 purchase, which amounts to $8,000 ($400,000 x 0.02). Therefore, the best choice is to accept the discount and pay within 10 days, as they will save $8,000.

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