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20 December, 15:44

The effective rate of a $30,000 non-interest-bearing simple discount 5%, 60-day note is

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  1. 20 December, 16:44
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    When purchases are made between the seller and the buyer, they place the transaction details in invoices. An invoice is a receipt that shows the quantity of goods sold, date of purchase, and the agreed prices. There are other sellers who give incentives to buyers who pay earlier. So, for an invoice that has a 60-day note with a non-interest-bearing simple discount 5%, it just basically means that the buyer gets a discount if he could pay within 60 days. This payment has 0% interest. Let's say the buyer decides to pay the seller 59 days after his date of purchase, he could still avail of the discount. The amount that he will have to pay, would only be

    Amount = $30,000 (1 - 0.05) = $28,500

    The effective rate would then be $28,500.
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