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Free trade credit and costly trade credit

04/05/2021 Client: muhammad11 Deadline: 2 Day

Why is some trade credit called free while other credit is called costly? If a firm buys on terms of 2/10, net 30, pays at the end of the 30th day, and typically shows $300,000 of accounts payable on its balance sheet, would the entire $300,000 be free credit, would it be costly credit, or would some be free and some costly? Explain your answer. No calculations are necessary.

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