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The following identifies the use of the formula ( 8 - 1 ) in calculating the cost of forgoing the discount. On a $ 1
The following identifies the use of the formula in calculating the cost of forgoing the discount.
On a $ billing we could pay $ up to the th day or $ at the end of days. If we fail to take the cash discount, we get Page to use $ for more days for a $ fee. The interest rate on the use of that money is then a whopping percent. Note that we first consider the interest cost and then convert this to an annual. basis. The standard formula for approximating this interest cost is
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