If a company is given credit terms of 2/10 n/30 it should
A) hold off paying the bill until the end of the credit period while investing the money at 10% annual interest during this time.
B) pay within the discount period and recognize a savings.
C) pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill.
D) recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price.

Question

Quizplus · Accepted Answer

The company should take advantage of the discount offered and pay within the discount period to save money. Waiting until the end of the credit period to pay could result in the loss of the discount and ultimately cost the company more money.

If a Company Is Given Credit Terms of 2/10 N/30