Help needed?
abdulr
Registered Posts: 2 New contributor ?
Hi
Please can anyone help with me a question on one of the papers i am trying...
How do you work out the annual percentage cost of a discount where an average invoice value if given, along with normal terms of trade which is 90 days, and a 2% discount given on payment within 30 days?
I thought i had this one cracked, but obviously not!!!
Thanks!
Please can anyone help with me a question on one of the papers i am trying...
How do you work out the annual percentage cost of a discount where an average invoice value if given, along with normal terms of trade which is 90 days, and a 2% discount given on payment within 30 days?
I thought i had this one cracked, but obviously not!!!
Thanks!
0
Comments

Assuming a 365 day year then: 
100/98 = 1.0204
365/60 = 6.083
1.0204^6.083  1 = 0.13
= 13 %
There is probably another way to work it out but I belive this is correct answer.0 
Hi
Thanks for the info. The question mentions that the average invoice value is 2k, where does this come into it? In fact, this is the whole question:
ABC company is considering giving discounts for prompt payments. The average customer invoice is 2k, and normal terms are 90 days. ABC is considering giving a 2% discount for payment within 30 days. Calculate annual percentage cost of this discount.
Does it matter what the average customer invoice value it?0
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