Merchandise with an invoice price of $4000 is purchased on June 2 subject to terms of 2/10, n/30, fob destination. Transportation costs paid by the seller totaled $150. What is the cost of the merchandise if paid by June 12, assuming the discount is taken?

My answer is $3920 with the 20% discount
Is this correct?

Answers given are
$4150
$4070
$4067
$3920

Quote:

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Originally Posted by Noah91399

my answer is $3920 with the 20% discount
is this correct?

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I agree it is $3,920 with an $80 discount.

Except the discount rate is at 2%, not 20 :p

But I know you know that, you just mistyped since you did get the correct answer.

Correct answer above. Nothing to say more, except clarifying one more thing.
The terms 2/10, n/30, means that if you pay within 10 days, you get 20% discount, otherwise if not, then you have to pay within 30 days from the purchasement date.

Quote:

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Originally Posted by moussahawas

Correct answer above. Nothing to say more, except clarifying one more thing.
The terms 2/10, n/30, means that if you pay within 10 days, you get 20% discount, otherwise if not, then you have to pay within 30 days from the purchasement date.

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No it does not.

2/10, n/30 means that if you pay within 10 days, you get a 2% discount; otherwise, you MUST pay within 30 days.

If you say the answer above is correct, why then was there only a 2% discount taken, and not 20%?