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24 May, 20:47

The expression "6/10, net 45" means that the customers receive a 6% discount if they pay within 10 days; otherwise, they must pay in full within 45 days.

What would the seller's cost of capital have to be in order for the discount to be cost justified?

A• 64.5714%

B• 58.5714%

C• 59.5714%

D• 62.5714%

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  1. 24 May, 21:14
    0
    D• 62.5714%

    Explanation:

    The computation of the seller cost of capital for the discount is as follows

    = Received discount by a customer * total number of days in a year : number of days

    = 6% * 365 days : 35 days

    = 6% * 10.42

    = 62.5714%

    The number of days is computed below:

    = Net days - discount days

    = 45 days - 10 days

    = 35 days
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