If a firm sells goods on terms 2/30 net 60, customers who do not take the cash discount are effectively borrowing money at approximately 2% per year.

Name: If a firm sells goods on terms 2/30 net 60, customers who do not take the cash discount are effectively borrowing money at approximately 2% per year.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The 2% discount is for early payment within 30 days, not an annual rate. If not taken, the cost of not taking the discount is much higher when annualized.

If a Firm Sells Goods on Terms 2/30 Net 60