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5. A store in a mall sells seasonal, special-promotion merchandise, such as flowerpots for the gardening season, autumn home decorations, Halloween decorations, and calendars.
5. A store in a mall sells seasonal, special-promotion merchandise, such as flowerpots for the gardening season, autumn home decorations, Halloween decorations, and calendars. The average monthly value of inventory is $45,000. Interest costs at a 10.7% annual rate are paid on 95% of the inventory's value. Ten percent of inventory is boxed and stored for sale the following year at a storage cost of 3.8% of inventory value. Other carrying costs total $1,850 a month. a. What are the store's annual interest costs? b. Storage costs? c. What are the store's total annual carrying costs? d. What is the carrying cost per dollar of inventory, to the nearest tenth of a cent?
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