How much does he gain by this transaction? (A retailer has an account for N200.00 from a manufacturer who gives two months' credit but only after...)

[chijioke]

A retailer has an account for N200.00 from a manufacturer who gives two months' credit but only after a cash discount of 5% for prompt payment. The retailer borrows N200.00 from his bank at 9% per annum for two months and pays promptly to secure the cash discount. How much does gain by this transaction?

My attempt​

The interest for N200.00 borrowed for the bank $$\rightarrow$$$$200 \times \frac{9}{100} \times \frac{2}{12} = N3$$So the interest is N3.
The retailer paid promptly and was given a discount of 5%
$$\rightarrow$$
$$200 \times \frac{5}{100} = N10$$That means he paid (N200 - N10 ) = N190
So he was able to save N10, but he has to pay N3 as interest to the bank for the loan he took. So he gains N7.
Am I right?

 

[The Highlander]

Am I right?

What you have written all looks good to me but I refer you to my opening comments in my last post in your previous thread: here (qv).

Do you have a published answer to this question and are you posting your work because your answer isn't the same as it?

If you do have answers to these problems you are working on then I would expect that you would only post the problems that have a different answer from the one you have arrived at yourself.

Banking interest problems can be very tricky for a number of reasons but, as I say, your working looks fine as long as there are no conditions that you haven't told us about and the interest is calculated on an annual rate divided into 12 equal monthly instalments for loans that last less than a year (ie: the interest is not compounded in any way).

Do you have an answer for this problem?

If you do and it's the same as your answer then everything looks fine.

However if you have a published answer that is not the same as yours then tell us what the book's answer is (and maybe upload a picture of the question for us again too?).

Hope that helps.

 

[lookagain]

My attempt​

$$200 \times \frac{9}{100} \times \frac{2}{12} = N3$$
$$200 \times \frac{5}{100} = N10$$

In your attempt, you are missing units in two places:

$$N200 \times \frac{9}{100} \times \frac{2}{12} = N3$$

$$N200 \times \frac{5}{100} = N10$$

 

[chijioke]

Do you have an answer for this problem?

If you do and it's the same as your answer then everything looks fine.

However if you have a published answer that is not the same as yours then tell us what the book's answer is (and maybe upload a picture of the question for us again too?).

Sorry for replying late.
The answer for the problem is provided. Unfortunately the solution is not the same as I got.
In the book, the answer is N283.67 which is different from the N7.00 I got. What do you have to say?

 

[The Highlander]

Sorry for replying late.
The answer for the problem is provided. Unfortunately the solution is not the same as I got.
In the book, the answer is N283.67 which is different from the N7.00 I got. What do you have to say?

Hi @chijioke

I'm afraid that I have to repeat what I said already ("...upload a picture of the question for us again too...").

I know English is not your first language and I don't wish to be picky about your translations but your original post was open to different interpretations because the English didn't make perfect sense. It wasn't entirely clear what was meant by your description of the situation: "A retailer has an account for N200.00 from a manufacturer who gives two months' credit but only after a cash discount of 5% for prompt payment".

And I also pointed out that Bank interest payments can be quite tricky, so it is very important to know exactly what terms the bank applies interest to loans and how it is charged over periods that are not whole years when an annual (per annum) rate is quoted.

That is why I wanted to see the actual problem in its original context (eg; does it appear in an exercise (set of problems) that comprises questions that all fall under the same 'heading', eg: problems on bank interest, where certain 'rules' are provided at the start of the exercise).

The way I interpreted your OP, I expected the answer to lie in the range: ₦0 - ₦10 (just as you appeared to do too) but now you are saying the book's answer is so radically different from that range then I can only assume that the question is asking something quite different from what I originally thought!

Can you upload a picture of the question please?

If it is at all possible, please include the whole exercise (up to this question) including any formulae or instructions given at the start that the student is expected to use or follow when answering the questions.

Unless anyone else can shed any light on this problem for you, then I'm afraid I can't help you any further until I know more about exactly what was being asked here.

Hope that helps.

 

[jonah2.0]

Beer assisted recall follows.

A retailer has an account for N200.00 from a manufacturer who gives two months' credit but only after a cash discount of 5% for prompt payment. The retailer borrows N200.00 from his bank at 9% per annum for two months and pays promptly to secure the cash discount. How much does gain by this transaction?

My attempt​

The interest for N200.00 borrowed for the bank $$\rightarrow$$$$200 \times \frac{9}{100} \times \frac{2}{12} = N3$$So the interest is N3.
The retailer paid promptly and was given a discount of 5%
$$\rightarrow$$
$$200 \times \frac{5}{100} = N10$$That means he paid (N200 - N10 ) = N190
So he was able to save N10, but he has to pay N3 as interest to the bank for the loan he took. So he gains N7.
Am I right?

Sorry for replying late.
The answer for the problem is provided. Unfortunately the solution is not the same as I got.
In the book, the answer is N283.67 which is different from the N7.00 I got. What do you have to say?

I'm almost certain that it's one of them invoice cash discounts situation. Almost. It's missing some elements though.