Implied Interest Example
3/10 net
50 days credit terms
Solution
Above
example shows that there is no discount for 10 days and a discount or interest
is 3% for 40 days. This information can be used to calculated annual discount
or implied interest.
40 days
Payment
Discount
= 3%
3/(100-3)
x 365/40
=0309 x
9.125
=28.19%
Example of Implied Interest
4/10 net
60 days credit terms
Solution
50 days Discount
Rate = 4%
4/(100-4)
x 365/50
=.04166
x 7.3
=30.4118%
