Understanding of Discount Rate
Discount Rate is the involvement paid past times the borrower upon receipt of the loan. The procedure of discount calculation uses a unmarried involvement system, as well as thus to calculate the size of the discount is virtually equal to the calculation of the total of a unmarried involvement if the total of the loan as well as the discounted % is known.
Discount Rate Formulas
D = G 10 i 10 t
Information:
D = Discount Rate
M = Capital
i = Interest
t = Time
Example of Discount Rate
Loans of $2,000 with 3%/month discount charge per unit of measurement arrangement as well as volition hold upward refunded later 5 months. Please specify the value of the discount rate!Resolution:
M = $2,000
i = 3%/month
t = five months
D = G 10 i 10 t
D = $2,000 10 3% 10 5
D = $300
So the value of the discount charge per unit of measurement is $300.
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Reference :
- The To'Ali mass of sales as well as accounting mathematics books