Because money has time value, a cash sale is always more profitable than a credit sale.

Question

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The profitability of a cash sale versus a credit sale depends on various factors including the interest rate, the time period of the credit, and the opportunity cost of having cash now versus later. A credit sale could potentially be more profitable if the terms of the credit include a favorable interest rate or if the deferred payments allow the seller to invest the receivables in high-return opportunities.

Because Money Has Time Value, a Cash Sale Is Always