Level 4. Credit control Assesmenr 1, task 2
genesta
Registered Posts: 26 Regular contributor ⭐
A companys terms of payment are 45 days. It is offering a discount of 2% for payment within 7 days.
The simple annual interest rate of the discount is 19.60%. How did they get it?
The simple annual interest rate of the discount is 19.60%. How did they get it?
0
Comments
-
Formula to calculate the annual interest rate is:
(d/100-d)x(365/N-D)x100%
Where
d=settlement discount percentage
N=normal settlement period in days
D=settlement period for early payment in days
So,
(2/100-2)x(365/45-7)x100=19.60%
P.s. Have a look into Osborne tutorial, page 51/52, it explains it quite well.Believe you can and you're halfway there...0 -
Thank you!!!
I do not have Osborne books with me. I am on holiday...0
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