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working capital

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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December 4, 2014 at 10:52 am #217262
sonia
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- Topics: 13
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sale 200m
curently taken 40 day to payment
offering 1% discount to payment in 15 day expected 60% customer take this discount
what is effective amonunt of annul discount ?
December 4, 2014 at 11:11 am #217288
John Moffat
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- Topics: 57
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Cost of discount is 1/99 = 1.010101% over a period of 25 days (40 – 15).
The annual effective rate = (1.010101 ^ (365/25) ) – 1 = 0.1580 or 15.80%
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