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

---

Definitions:

Oil to Natural Gas

The transition or conversion from using oil as a primary energy source to using natural gas, often due to environmental, economic, or supply considerations.

Structurally Unemployed

Individuals who are unemployed due to their skills not matching job requirements or significant shifts in the economy.

Computerized Instruction

An educational method that involves the use of computers and software programs to provide interactive lessons and assessments.

College Faculty

The body of teachers and professors responsible for imparting education and conducting research within a college or university.