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Annual Interest Rate with Discount Formula

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Annual Interest Rate with Discount represents the annualized return or benefit gained from paying early and receiving the discount. Check FAQs

AIRD = \frac{CDA \cdot 360}{(IA - CDA) \cdot (TP - CDP)}

AIRD - Annual Interest Rate with Discount?CDA - Cash Discount Amount?IA - Invoice Amount?TP - Term for Payment?CDP - Cash Discount Period?

Annual Interest Rate with Discount Example

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Here is how the Annual Interest Rate with Discount equation looks like with Values.

Here is how the Annual Interest Rate with Discount equation looks like with Units.

Here is how the Annual Interest Rate with Discount equation looks like.

5.2478 = \frac{250 \cdot 360}{(300 - 250) \cdot (350 - 7)}

5.2478 = \frac{250 \cdot 360}{(300 - 250) \cdot (350 - 7)}

5.2478 = \frac{250 \cdot 360}{(300 - 250) \cdot (350 - 7)}

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Annual Interest Rate with Discount Solution

Follow our step by step solution on how to calculate Annual Interest Rate with Discount?

FIRST Step Consider the formula

AIRD = \frac{CDA \cdot 360}{(IA - CDA) \cdot (TP - CDP)}

Next Step Substitute values of Variables

∴

AIRD = \frac{250 \cdot 360}{(300 - 250) \cdot (350 - 7)}

Next Step Prepare to Evaluate

∴

AIRD = \frac{250 \cdot 360}{(300 - 250) \cdot (350 - 7)}

Next Step Evaluate

∴

AIRD = 5.24781341107872

LAST Step Rounding Answer

∴

AIRD = 5.2478

Annual Interest Rate with Discount Formula Elements

Variables

Annual Interest Rate with Discount

Annual Interest Rate with Discount represents the annualized return or benefit gained from paying early and receiving the discount.

Symbol: AIRD

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Annual Interest Rate with Discount

Cash Discount Amount

Cash Discount Amount refers to the monetary reduction in the total invoice amount that a buyer receives when taking advantage of a cash discount offered by a seller for early payment of an invoice.

Symbol: CDA

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Cash Discount Amount

Invoice Amount

Invoice Amount refers to the total monetary value specified on an invoice issued by a seller to a buyer for goods sold or services rendered.

Symbol: IA

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Invoice Amount

Term for Payment

Term for Payment describes a payment condition or agreement, particularly in business transactions.

Symbol: TP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Term for Payment

Cash Discount Period

Cash Discount Period is the time during which a buyer can take advantage of a cash discount offered by a seller for early payment of an invoice.

Symbol: CDP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Cash Discount Period

Other formulas in Banking category

Go Interest Charges Per Quarter

ICQ = (Cr) \cdot \frac{KIR + 1}{400}

Go Interest Earnings Per Quarter

IEQ = \frac{A}{CB} \cdot \frac{KIR - 2}{400}

Go Commercial Interest

CInt = \frac{D s \cdot AIR \cdot PD}{100 \cdot 360}

Go Effective Cash Discount Rate

ECDR = \frac{CDR \cdot 360}{TP - CDP}

How to Evaluate Annual Interest Rate with Discount?

Annual Interest Rate with Discount evaluator uses Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period)) to evaluate the Annual Interest Rate with Discount, Annual Interest Rate with Discount typically refers to a scenario where an interest rate is applied to the amount borrowed, but there's also a discount involved. Annual Interest Rate with Discount is denoted by AIRD symbol.

How to evaluate Annual Interest Rate with Discount using this online evaluator? To use this online evaluator for Annual Interest Rate with Discount, enter Cash Discount Amount (CDA), Invoice Amount (IA), Term for Payment (TP) & Cash Discount Period (CDP) and hit the calculate button.

FAQs on Annual Interest Rate with Discount

What is the formula to find Annual Interest Rate with Discount?

The formula of Annual Interest Rate with Discount is expressed as Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period)). Here is an example- 5.247813 = (250*360)/((300-250)*(350-7)).

How to calculate Annual Interest Rate with Discount?

With Cash Discount Amount (CDA), Invoice Amount (IA), Term for Payment (TP) & Cash Discount Period (CDP) we can find Annual Interest Rate with Discount using the formula - Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period)).

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Annual Interest Rate with Discount Formula

Annual Interest Rate with Discount Example

Annual Interest Rate with Discount Solution

Annual Interest Rate with Discount Formula Elements

Other formulas in Banking category

How to Evaluate Annual Interest Rate with Discount?

FAQs on Annual Interest Rate with Discount

Variable Name