1. Suppose you offer customers a cash discount with terms 2/10, net 30. Which of the following statements is TRUE?

a. Your customers receive a 10% discount if they pay within 30 days of the invoice date.

b. If a customer owes $10,000 and pays within the discount period, $9,000 should be paid.

c. The effective annual rate of offering this discount is less than 3% APR, so you would be smart to offer the discount if you can reinvest early receipts at 4% APR or more.

d. The effective annual rate of offering this discount is very high (at least 24%), which means you are foolish to offer this costly discount.

e. None of the above is a true statement.