HP 10bII - Cost of Not Taking a Cash Discount

Cost of Not Taking a Cash Discount
A
cash
discount
gives
a
buyer
a
reduction
in
price
if
the
payment
is
made
within
a
specified
time
period.
For
example,
“2/10,
NET/30”
means
that
the buyer
can deduct
2 percent
if payment
is made
within
10 days.
1f
Payment
is
not
made
within
10
days,
the
full
amount
must
be
paid
by
the
30™
day.
You
can
usc
the
equation
shown
below
to
calculate
the
cost
of
failing
to
take
the cash
discount.
The
cost
is calculated
as an annual
interest
rate
charged
for delaying
payment.
DISC% x 360 x 100
COST%
=
—————___DISC%
x
360x100
&—
—
°С
((100-
DISC%)
x
(TOTAL
DAYS
—
DISC
DAYS))
DISC% is the discount percent if the payment is made early. TOTAL
DAYS
is
the
total
number
of
days
until
the
bill
must
be
paid.
DISC
DAYS
is the number of days for which the discount is available.
Example.
You
receive
a
bill
with
the
credit
terms
2/10,
NET/30.
What
is the cost
of not taking
the cash
discount?
Keys:
Display:
Description:
@®OOOLHOODS
=
72,000.00
Calculates
numerator
in equation.
COQODDDODSH
98.00
Parentheses
force
order
of calculation.
®O0SG@SDaa
36.73
Calculates,
as
an
annual
percentage rate, cost of
not taking discount.
8: Additional Examples 97