A Firm Has Just Received an Invoice for $1,000 with the Following

question 154

Multiple Choice

A firm has just received an invoice for $1,000 with the following terms: 3/10, net 30. In this case, the firm:

• A) should not worry about earning the cash discount because the amount is small.
• B) can take a 10 percent discount if it pays within 3 days, and otherwise the full amount is due in 30 days.
• C) can take a 3 percent discount if it pays the invoice on the 30^th day.
• D) in effect, will be borrowing at an annual rate of 54 percent if it pays the invoice in 30 days.
• E) should pay $900 if it pays within 10 days.

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