A Firm Is Offered Credit Terms of 2/10 Net 45

question 62

Multiple Choice

A firm is offered credit terms of 2/10 net 45 by most of its suppliers but frequently does not have the cash available to take the discount. The firm has a credit line available at a local bank at an interest rate of 12 percent. The firm should ________.

• A) give up the cash discount, financing the purchase with the line of credit
• B) take the cash discount and pay on the 45th day after the date of sale
• C) take the cash discount and pay on the first day of the cash discount period
• D) take the cash discount, financing the purchase with the line of credit, the cheaper source of funds

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Definitions:

Rude Interruption

An impolite or abrupt interruption that disrupts the flow of conversation.

Pro Active

Taking initiative by acting rather than reacting to events or situations.

Multiple Applicants

Several individuals applying for the same position or opportunity.

Misconceptions

False or mistaken ideas or beliefs, often arising from incorrect reasoning or understanding.