I am offering a discounted amount of $1,613,287.80 on 3/31/10 or the full amount of $1,613,623.97 on 4/15/10 for my client. The person paying this amount probably is too lazy to pay early and will pay the full amount. Would you pay early or pay the full amount?
Full amount… lol… you could make that much off interest alone.
That’s an annualized discount rate of about 0.5%…that’s like what I get in my checking accounting, why would they pay early?
artvandalay Wrote: ------------------------------------------------------- > That’s an annualized discount rate of about > 0.5%…that’s like what I get in my checking > accounting, why would they pay early? I was just wondering what the people on the board would do. You are correct - it is a 0.5% discount. I have to offer them these terms though because the treasury department told me to do so. It is actually quite a pain to offer a discount as they probably have a normal payment process and this would disrupt that process for less than 400 bucks.