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#1
August 1st 05, 07:35 AM
 AussieGal Posts: n/a

I have to write the formula that calculates the Annual Percentage Interest
Cost of the Discount not taken

Annual Percentage Interest Cost of Discount Not Taken

Prompt Payment Discount Amount
2.5% (cell A1)

Invoice has to be paid within how many days to qualify for the discount
10 (cell A2)

Net amount of invoice to be paid within how many days
30 (cell A3)

Annual Percentage Interest Cost of Discount Not Taken

The figures have to be worked out on \$100,000. I assume the days forgone
would be 20 (30 - 10)

I know the formula goes something like this -

Annual % interest cost of discount not taken = % prompt payment discount /
(100% - % prompt payment discount) x 365 / credit days forgone

But I cannot get my head around it. Some advice would be most appreciated.
Regards Chris.

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