RatedrillCost of skipping a discount
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
A supplier offers terms of 3/10, net 30. If you skip the discount and pay on day 30, what is the nominal annual cost of that credit? Use a 365-day year.
What this problem teaches
The formula: Cost = d / (100 - d) × 365 / (N - D). You pay 3% extra to keep the money 20 more days.
A hint if you get stuck
Cost = discount % / (100 - discount %) × 365 / (days paid - discount days).
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