Post by Alex G on Jul 13, 2020 3:13:24 GMT
Hi there
If someone could help me with this - that would be great...
Question is:
Company currently receives payment from customers on average 65 days after invoice date - company considereing 2% early settlement discount for payment within 30 days
What is the effective annual interest rate of the early settlement discount using compound interest methodology and assuming a 365 day year?
I calculated:
100/100-2 = 100/98 = 1.02
365/35 = 10.429
1.02 arrow yx 10.429 - 1 x100 = 22.94%
However, the correct answer is 23.45%
Can anyone break this down for me? Am I hitting the wrong button on the calculator?!! Panicking..
Thanks
Alex
If someone could help me with this - that would be great...
Question is:
Company currently receives payment from customers on average 65 days after invoice date - company considereing 2% early settlement discount for payment within 30 days
What is the effective annual interest rate of the early settlement discount using compound interest methodology and assuming a 365 day year?
I calculated:
100/100-2 = 100/98 = 1.02
365/35 = 10.429
1.02 arrow yx 10.429 - 1 x100 = 22.94%
However, the correct answer is 23.45%
Can anyone break this down for me? Am I hitting the wrong button on the calculator?!! Panicking..
Thanks
Alex