Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

We hope you are all safe and well and if you need us we will be here. 💚

# Help cmcc simulation

does anyone remember how to calculate the annual percentage cost of discount in the simulation. It was task 7 - invoice £700 but 5% discount will be offered if the invoice is paid in 14 days...

• Well-Known Registered Posts: 145
I've been learning this today -

You'll also need how many days for the normal settlement period -

the formula is:

(d/(100-d)) x (365/(N-D)) x 100

where d = settlement discount percentage (5%)
N = Normal Settlement Period in days (?)
D = Settlement period for early repayment in days (14 days)
• TRINIGYAL
1. CathG has correctly given the simple interest formula :
(d/(100-d)) x (365/(N-D)) x 100
2. I have told my class that if they use this formula they should add this sentence:
3. This value is the simple interest percentage rate rather than a true compounded annual percentage so is under valuing the true cost to the business.
4. The annual percentage cost of discount involves a geometric calculation so it has to be done using a calculator that has a "to the power of" button.
5. 1+(d/(100-d))^ (365/(N-D))-1
Sandy
[email protected]
www.sandyhood.com