6.8k views
0 votes
On February 10, Shankar Company pays the invoice for the inventory purchased on February 2. What is the amount of the discount taken?

a. $3,200
b. $0
c. $520
d. $31,480

User Eat
by
7.4k points

1 Answer

3 votes

Final answer:

The amount of the discount taken on February 10 for an inventory purchase can be calculated using the present value formula.

Step-by-step explanation:

The amount of the discount taken on February 10 can be calculated by finding the present value of the inventory purchase on February 2. The present value formula is: PV = Payment / (1+r)^n, where PV is the present value, Payment is the payment amount, r is the interest rate, and n is the number of periods.

In this case, the present value of the inventory purchase can be calculated as: PV = $3,240 / (1 + 0.08)^8 = $2,777.80. Therefore, the amount of the discount taken is the difference between the payment amount and the present value: $3,240 - $2,777.80 = $462.20.

Therefore, the correct answer is option c. $520.

User Reidisaki
by
7.5k points