sir with regards to the example 4 of the free lectures
i do understand that the effecive cost of not accepting the discount is 43.86%
my question is what is the effective cost % of ACcepting the discount ?
is anything there related to effective cost of accepting the discount ?
thank you sir
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chapter 5
4y ago#1The cost of taking the discount is the overdraft interest that will be payable by paying early (which is not given in this question because it is not relevant to what is asked).
As I explain in the lectures, we will take the discount if the saving of 42.86% per year is more than the overdraft interest rate per year.
(There is no point at all in using the lectures notes without watching the lectures. They are only lecture notes and it is in the lectures that I explain and expand on the notes.)
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