A vendor offers you an early payment discount.
You will get a 2% discount if you pay the balance within 10 days.
Otherwise, the full balance is due in 30 days.
What is the effective interest rate earned on this discount?
Effective Interest Rate on the Discount Formula is below:
This is stated as 2/10 net 30
| Discount % | |
| 100 - Discount % |
| x |
| 360 |
| Balance Due Days - Discount Period Days |
| 2% | |
| 100 - 2% |
| x |
| 360 |
| 30 - 10 |
| 2% | |
| 98% |
| x |
| 360 |
| 20% |
Effective rate of interest = 0.020408163265306 x 18
Effective rate of interest = 0.36734693877551 or 36.73%
How does the Vendor Discount Effective Rate of Interest Calculator work?
Free Vendor Discount Effective Rate of Interest Calculator - Calculates the effective rate of interest earned from a vendor discount for a prepayment of a balance within a certain amount of days for a percentage discount
This calculator has 3 inputs.
This calculator has 3 inputs.
What 1 formula is used for the Vendor Discount Effective Rate of Interest Calculator?
Discount %/(100 - Discount %) * 360/(Balance Due Days - Discount Period Days)
What 3 concepts are covered in the Vendor Discount Effective Rate of Interest Calculator?
- discount
- the amount by which the market price of a bond is lower than its principal amount due at maturity
- interest rate
- the proportion of a loan that is charged as interest to the borrower or proportion of principal credit given to a depositor
- vendor discount
- Discount percentage paid within m days, else the full price is due in n days
