can anyone tell me how to calculate… 2/10, net 50; paying full at 50th day, what’s the EFFECTIVE borrowing cost on day 10 by skipping the discount?
(1 + .02/.98)^(365/40) = x not sure what that comes out to…
MINUS ONE
Yeah it’s: [1 + Discount / (1 - Discount)] ^ (365/t) where t is the # of days beyond the discount period, 40 in this case. 2/10 represents a 2% discount if bill is payed within 10 days, n50 represents the maximum number of days to pay the billing. In theory if you aren’t going to utilize the discount then don’t pay until the last possible day because you are foregoing funds that could be invested in the mean time.
20.24%
ah ya minus 1…hopefully i’d remember that when I get an answer of something like 1.48393959075…that’s a lot of decimal points…and i’m clearly wasting time because I don’t want to read these books anymore