How to solve this mathematical equation?
Sir,
For your clarification the question is narrated below :
Suppose ABC Ltd has been offered credit terms from its major supplier of 2/10, net 45 . Hence the company has the choice of paying Rs.10 per Rs100 or to invest the Rs. 98 for an additional 35 days and eventually pay the supplier Rs100 per Rs 100. The decision as to whether the discount should be accepted depends on the opportunity cost of investion Rs 98 for 35 days. What should the company do? [Financial mangement ]
In the particular question we have to find the cost of interest . The formula is :-
The cost of interest = (100/100-d)365/t -1
Here, discount (d) = 2 ; t = 35 days.
How to find the cost of interest percentage ?
Ignore the decision making part and the rest of figures given in the question. Please provide the steps to solve this type of calculations.
Thanks in advance,
Deepak V.
Sir,
For your clarification the question is narrated below :
Management of Sundry Creditors
Qn:Suppose ABC Ltd has been offered credit terms from its major supplier of 2/10, net 45 . Hence the company has the choice of paying Rs.10 per Rs100 or to invest the Rs. 98 for an additional 35 days and eventually pay the supplier Rs100 per Rs 100. The decision as to whether the discount should be accepted depends on the opportunity cost of investion Rs 98 for 35 days. What should the company do? [Financial mangement ]
In the particular question we have to find the cost of interest . The formula is :-
The cost of interest = (100/100-d)365/t -1
Here, discount (d) = 2 ; t = 35 days.
How to find the cost of interest percentage ?
Ignore the decision making part and the rest of figures given in the question. Please provide the steps to solve this type of calculations.
Thanks in advance,
Deepak V.
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