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FMAnyone know how to get the answer? Annual percentage rate

MMM7y ago
Scrimpy Co buys materials from Frugal Enterprises. Frugal offers discount terms of 2%discount for payment within 10 days or full payment within 30 days.Assuming a 360-day year, what is the annual percentage cost associated with Scrimpy’s failure to take advantage of the discount offered by Frugal? The answer is 36.7% how to get answer? I can't get it
John MoffatJohn MoffatTutor7y ago#1
The interest over 20 days is 2/98. Therefore the annual interest is 2/98 x 360/20 = 0.367 (or 36.7%). However I would be interested to know where you found this question, because strictly the annual interest should be calculated as (1 + 2/98) ^ (360/20) = 0.439 (or 42.9%). Have you not watched my free lectures on this, because I explain the reasoning behind it in my lectures.
MMM7y ago#2
Thank you for your reply. Yes. I did. I watched the video. I did calculated the APR is 43.9%. Just wonder why will have alternative way to calculate. Isn't mean the 36.7% is wrong?
John MoffatJohn MoffatTutor7y ago#3
Yes - strictly the 36.7% is wrong and the answer should be 43.9% That is why I am interested to know where you found the question :-)
MMuhammad1y ago#4
Sir this question is on studyhub
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