20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Percentage cost of the discount

This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.

Viewing 4 posts - 1 through 4 (of 4 total)

Author
Posts
July 22, 2016 at 7:42 am #328314
letheu
Member
- Topics: 12
- Replies: 12
Dear Teacher,
When it ia said that percentage cost of the discount for early settlement discount is 44%. What does it mean? I dont know 44% compared to what.
Thanks for answering me
July 22, 2016 at 8:01 am #328319
John Moffat
Keymaster
- Topics: 57
- Replies: 54659
It depends on the whole contact of the question.
However normally it would mean the interest cost per annum of offering a discount. You would then compare this with the rate of overdraft interest in order to decide whether or not the discount was worth offering.
I cover all this in my free lectures on the management of receivables.
The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
July 22, 2016 at 8:46 am #328327
letheu
Member
- Topics: 12
- Replies: 12
Sorry Teacher, what I meant was 44% of what?
July 22, 2016 at 9:21 am #328337
John Moffat
Keymaster
- Topics: 57
- Replies: 54659
It isn’t 44% of anything. It is an effective interest rate (and the lower the interest the better).
Again I do suggest that you watch the lectures.
Author
Posts

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic.