Cash Discounts
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X Company has always followed the policy to take any cash discounts on goods purchased. Recently the company purchased a large amount of raw materials at a price of $800,000 with terms 2/10, n/30 on which it took the discount. Company X recently estimated its cost of funds at 10% should the company continue this policy of always taking the cash discount?
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The credit period is 30 days minus the 10 days of free credit i.e 20 days. The effective ...
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