A Firm Offers Its Customers 1/10 Net 40

question 13

Multiple Choice

A firm offers its customers 1/10 net 40. What is the cost of trade credit to a customer who chooses to pay on day 40?

• A) 12.8%
• B) 13.0%
• C) 65.5%
• D) 96.0%

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Definitions:

Valid Offer

A valid offer is a clear proposal made by one party to another indicating a willingness to enter into a contract under specified terms, which, if accepted, results in a binding agreement.

Firm Offer

Under the Uniform Commercial Code, a signed, written offer by a merchant containing assurances that it will be held open, and which is not revocable for the time stated in the offer, or for a reasonable time if no such time is stated.

Consideration

In contract law, something of value exchanged between parties that is necessary for a valid contract.

Offeror's Death

refers to the termination of an offer in contract law due to the death of the person making the offer before it is accepted.