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Dear Tutor, I calculated in the following way but it shows sth different calculation method
Current position
60/365*456000=74959New position
30/365*456000=37479cost
old payables-74959
new payable-37479
fall in payables=37480
reduction in finance cost
37480*0.05=1874
benefit
0.01*456000=4560
net benefit 2686the answer shows
30/365*0.99*456000=371051 percent discount we normally apply to find discount based on purchase but if it does not say how many will use or take advantage of 1 percent discount then why we multiplied 0.99 ?could you explain?
in other examples regardless of payable and receivable examples usually customers say for 45 percent will benefit from discount and the remining will take advantage of old method but here the exact percentage figure has not been showen.
seems to be confusing.If you watch my free lectures on this again, you will see that I make it clear that there are arguments for both taking 100% and for taking 99%, but that the examiner has made it clear that he always accepts either answer. (The answer will be slightly different depending which you do, but the difference is always small anyway.)
So,the way i calculated is also correct?
I watched it but probably missed that part.
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