Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

تمرين 13

Cash discounts-ROI Annual credit sales of Nadak Co. total $680 million. The firm gives a 2% cash discount for payment within 10 days of the invoice date; 90% of Nadak's accounts receivable are paid within the discount period.
Required:
a. What is the total amount of cash discounts allowed in a year?
b. Calculate the approximate annual rate of return on investment that Nadak Co.'s cash discount terms represent to customers who take the discount.