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Just did CIMA’s pearson vue F1 mock, and there was some stuff that came up that I don’t think’s been covered in my text books.
Please could someone help with the following question (I’m confused by it);
An entity has been offering 60 day payment terms to customers, but wants to reduce its working capital and improve cash flow. The entity is proposing to offer 1.5% discount for payment within 28 days.
Assume an invoice of $1000.
Calculate the effective annual compound interest rate that will be incurred if this proposal is adopted.
Give your answer to one decimal place (%).
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