For firms that are in a financial position to take a cash discount, it is generally a more financially sound decision to take the discount if the terms offered are 2/10 net 30.

Question

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Taking a cash discount of 2% for paying within 10 days is equivalent to an annualized interest rate of 36.5%. This is a better financial decision for firms than waiting until the full payment is due in 30 days.

For Firms That Are in a Financial Position to Take