Credit Control - Annual Interest Rates -- Help please!!

Company's payment terms are 45days. It is offering a discount of 2% for payment within 7 days.

Whats the simple annual interest rate? answer they have is 19.6% but i cant see how they get there?

Any help is appreciated thank you!


  • BlueJeans
    BlueJeans Registered Posts: 56
    Good Morning rSpurrell

    You just have to use the formula given, which is: (d/100-d)x(365/N-D)x100
    d= discount percentage given
    N=normal payment term
    D=discount payment term

    so... (2/100-2)x(365/45-7)x100=19.60%

    Believe you can and you're halfway there...
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