What do you mean by Annual Interest Rate with Discount ?
Annual Interest Rate with Discount is the rate at which interest is charged on the principal amount for a year with a discount involved in it. When you have an Annual Interest Rate with a Discount, it means that in addition to applying the interest rate to the principal, there's also a discount applied upfront. The discount effectively reduces the initial amount borrowed. For example, let's say you borrow $1000 with an annual interest rate of 10% and a discount of 5%. This means you receive $950 upfront ($1000 - 5% discount), but you still owe interest on the full $1000 for the year at a rate of 10%. So, the total amount you owe at the end of the year would be the principal ($1000) plus the interest ($1000 * 10% = $100), which equals $1100. However, because you received a $50 discount upfront, you effectively only owe $1050 ($1100 - $50) at the end of the year.
How to Calculate Annual Interest Rate with Discount?
Annual Interest Rate with Discount calculator uses Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period)) to calculate 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 calculate Annual Interest Rate with Discount using this online calculator? To use this online calculator 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. Here is how the Annual Interest Rate with Discount calculation can be explained with given input values -> 5.247813 = (250*360)/((300-250)*(350-7)).