You place an order for 290 units of inventory at a unit price of $110. The suppl

ID: 2720103 • Letter: Y

Question

You place an order for 290 units of inventory at a unit price of $110. The supplier offers terms of 2/10, net 30.

How long do you have to pay before the account is overdue?

If you take the full period, how much should you remit?

What is the discount being offered?

How quickly must you pay to get the discount?

If you do take the discount, how much should you remit?

If you don’t take the discount, how much interest are you paying implicitly?

How many days’ credit are you receiving?

You place an order for 290 units of inventory at a unit price of $110. The supplier offers terms of 2/10, net 30.

Answer:

A. How long do you have to pay before that account is overdue

Answer is 30 Days to pay before the account overdue.

A2 If you take the full period, how much should you remitt

Answer is Remitt the full amoun 290 * $ 110 = $ 31,900

b1. What is the discount being offered

Answer is The discount is 2% to pay within 10 days

b2. How quickly must you pay the get the discount.

Answer is within 10 days

b3. If you do take the discount, how much should you remitt?

Answer is $ 31,900 * 98% = $ 31262

c1 If you do not take the discount , how much interest are you paying implicitly?

2% * 360 / (30 - 10) = 36.7%

c2. How many days credit are you receiving?

30 - 10 = 20 Days credit

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