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    Total cash discounts allowed; ROI calculation for discounts

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    Annual credit sales of Nadak Co. total $340 million. The firm gives a 2% cash discount fort payment within 10 days of the invoice date: 90% of Nadak's accounts receivable are paid within the discount period.

    What is the total amount of cash discounts allowed in a year?

    Calculate the approximate annual rate of return on investment that Nadak Co. cash discount terms represent to customers who take the discount.

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    Solution Summary

    The solution computes total cash discounts allowed; ROI calculation for discounts given.