If a Firm Sells on Terms of 2/10,net 30 Days,and

question 79

True/False

If a firm sells on terms of 2/10,net 30 days,and its DSO is 28 days,then the fact that the 28-day DSO is less than the 30-day credit period tell us that the credit department is functioning efficiently and there are no past due accounts.​

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Definitions:

Discount Rate

The rate used in the DCF approach to quantify the present value of cash flows expected to occur in the future.

Monthly Payments

Regular payments made over a period of time, often used in loans or leasing agreements.

Growing Annuity

A financial term that refers to a series of cash flows or payments that grow at a fixed rate per period.

Required Rate

Required Rate, or the minimum expected rate of return on an investment, reflects the investor's risk tolerance and investment criteria.