The Expression "3/10,net 45" Means That the Customers Receive a 3

question 54

Essay

The expression "3/10,net 45" means that the customers receive a 3 percent discount if they pay within 10 days; otherwise,they must pay in full within 45 days.What would the seller's cost of capital have to be in order for the discount to be cost justified? (HINT: Opportunity Cost)

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Definitions:

Dollar Value

The worth or purchasing power of the United States dollar in terms of the amount of goods or services that one unit of money can buy.

Trade Deficit

A situation where a country's imports exceed its exports, leading to a negative balance of trade.

International Basis

Engaging in business or transactions that involve entities in multiple countries or global considerations.

Current Account Deficit

A measurement of a country's trade where the value of goods and services it imports exceeds the value of goods and services it exports.