If credit terms are 2/10 net 30, the annual cost of giving up the cash discount is 37.24%.

Name: If credit terms are 2/10 net 30, the annual cost of giving up the cash discount is 37.24%.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

To calculate the annual cost of giving up the cash discount, use the formula: (Discount % / (100 - Discount %)) x (365 / (Full credit period - Discount period)). Substituting the values, we get: (2 / (100-2)) x (365 / (30-10)) = 0.3724 or 37.24%. Therefore, the statement is true.

If Credit Terms Are 2/10 Net 30, the Annual Cost