Rainbow Inc

Multiple Choice

Rainbow Inc. has expected sales of $200,000 a month. Rainbow's cash sales are 10% of total sales and the remaining 90 percent pay on credit, of which 20% take advantage of a discount and rest pay during the following month. If Rainbow's credit policy is 2/10 net 30, the amount of discount offered by Rainbow is _____.

A) $850.
B) $720.
C) $560.
D) $485.
E) $900.