Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)

Level 4. Credit control Assesmenr 1, task 2

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?


  • BlueJeansBlueJeans LondonRegistered Posts: 56
    Formula to calculate the annual interest rate is:


    d=settlement discount percentage
    N=normal settlement period in days
    D=settlement period for early payment in days


    P.s. Have a look into Osborne tutorial, page 51/52, it explains it quite well. :)
    Believe you can and you're halfway there...
  • genestagenesta Registered Posts: 24
    Thank you!!!

    I do not have Osborne books with me. I am on holiday... ;)
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