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One method of conserving capital is by taking advantage of cash discounts. As an example -- assume that an invoice for $40,000 is dated December 1, 2011, with term 5/10 net 30.
a. If the invoice is paid on December 9, what is the amount to be paid? Does profit increase of decrease? Explain. b. If the invoice is paid on December 31, 2011, what is the amount to be paid?
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