Multiple Choice Question

Most firms will almost always pay within the discount period to take advantage of the cash discounts $($such as $\frac{2}{10},n30)$ offered by their suppliers because:

not making payments within the cash discount period is an ultra vires act and thus a violation of corporate law.

the time value of money states that it's always better to pay off liabilities sooner rather than later.

most credit terms represent a significant financing cost if the discounts are not taken.

most firms can earn a much higher ROI on their principal activities than that offered by the cash discounts.