Question

Virginia Supply offers their customers trade credit with terms 2/15, net 30. This implies that: Virginia's customers have very little incentive to pay within the discount period. paying within 30 days will let a customer deduct 15% off the invoice price. the annual financing cost of failing to pay within 15 days is about 48%. most customers will pay their bill within 2 days in order to take the maximum discount.

Answer 1

The answer is given below;

Step-by-step explanation:

This implies that 2%discount will be allowed if the customer pays within 15 days, otherwise normal credit period of the firm is 30 days.

From the given option, the closest choice is; Virginia's customers have very little incentive (i.e 2% discount) to pay within the discount period (which is 15 days).

Therefore the customers will not pay within 15 days just for 2% discount as normal credit period is 30 days.