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 customer is expected to pay at the net date, which is 30 days. The present value of $20,000 received in 30 days, discounted at an annual rate of 10%, is calculated as $20,000 / (1 + (0.10/12)) = $19,843.

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