The Lemon Company made a credit sale of $20,000. The invoice was sent today with the terms,3/10 net 30. This customer normally pays at the net date. If your opportunity cost of funds is 10% the expected payment is worth how much today?

Question

Quizplus · Accepted Answer

The expected payment is $20,000 due in 30 days. The present value of this amount, discounted at an annual rate of 10%, is calculated as $20,000 / (1 + (0.10/12))^30/30 = $19,843.

The Lemon Company Made a Credit Sale of $20,000