The Ault Company made a credit sale of $15,000.The invoice was sent today with the terms, 3/15 net 60.This customer normally pays at the net date.If your opportunity cost of funds is 9% the expected payment is worth how much today?

Question

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Using the terms 3/15 net 60, the customer receives a 3% discount if they pay within 15 days. This means they would only pay 97% of the $15,000, or $14,550 if they take the discount. If they do not take the discount, they would pay the full $15,000 within 60 days. 
To calculate the present value of the expected payment, we need to use the formula: 
PV = FV / (1 + r)^n 
PV = Present Value 
FV = Future Value 
r = interest rate 
n = number of periods

In this case, FV is either $14,550 (if the customer takes the discount) or $15,000 (if the customer does not take the discount). The interest rate, or opportunity cost of funds, is 9%. The number of periods is either 15 days (if the customer takes the discount) or 60 days (if the customer does not take the discount).

If the customer takes the discount: 
PV = $14,550 / (1 + 0.09/365)^15 
PV ≈ $14,789

If the customer does not take the discount: 
PV = $15,000 / (1 + 0.09/365)^60 
PV ≈ $13,761

Therefore, the expected payment is worth $14,789 today if the customer takes the discount, and $13,761 today if the customer does not take the discount. The best choice is B, since it represents the expected payment if the customer takes the discount, which is the most likely scenario based on the information given.

The Ault Company Made a Credit Sale of $15,000