7) Which of the following trade credit terms for goods and services purchased would be least desireable to the purchasing firm?

A) 2/10 net 30

B) 1/10 net 30

C) 3/15 net 30

D) Unless we know the firm's cost of borrowing we cannot determine which set of terms is least preferred.

8) What is the percentage cost of foregoing the payable discounts when the terms are 3/15 net 60 (rounded to the nearest whole percentage point)?

A) 18%

B) 25%

C) 37%

D) There is not enough information provided to answer this question.

9) What is the percentage cost of foregoing the payable discounts when the terms are 1/15 net 45 (rounded to the nearest whole percentage point)?

A) 8%

B) 10%

C) 12%

D) 14%

10) Which of the following definitions of working capital gap (WCG) is accurate?

A) WCG = age of inventory - age of receivables - age of payables

B) WCG = Age of receivables - age of inventory - age of payables

C) WCG = age of payables - age of inventory - age of receivables

D) WCG = age of inventory + age of receivables - age of payables

11) Which of the following actions could DECREASE a firm's working capital gap?

A) reduce the age of inventory

B) reduce the age of accounts payable

C) increase the age of accounts receivable

D) All actions listed would decrease a firm's working capital gap.