Annual Interest Rate with Discount Solution

STEP 0: Pre-Calculation Summary
Formula Used
Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period))
AIRD = (CDA*360)/((IA-CDA)*(TP-CDP))
This formula uses 5 Variables
Variables Used
Annual Interest Rate with Discount - Annual Interest Rate with Discount represents the annualized return or benefit gained from paying early and receiving the 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.
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.
Term for Payment - Term for Payment describes a payment condition or agreement, particularly in business transactions.
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.
STEP 1: Convert Input(s) to Base Unit
Cash Discount Amount: 250 --> No Conversion Required
Invoice Amount: 300 --> No Conversion Required
Term for Payment: 350 --> No Conversion Required
Cash Discount Period: 7 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
AIRD = (CDA*360)/((IA-CDA)*(TP-CDP)) --> (250*360)/((300-250)*(350-7))
Evaluating ... ...
AIRD = 5.24781341107872
STEP 3: Convert Result to Output's Unit
5.24781341107872 --> No Conversion Required
FINAL ANSWER
5.24781341107872 5.247813 <-- Annual Interest Rate with Discount
(Calculation completed in 00.004 seconds)

Credits

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IGNOU (IGNOU), India
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18 Banking Calculators

Annual Interest Rate with Discount
Go Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period))
Optimal Ordering Frequency
Go Optimal Ordering Frequency = sqrt((Material Requirements*Acquisition Price*Stock Keeping Expense Ratio)/(2*Cost Per Order))
Optimal Lot Size
Go Optimal Lot Size = sqrt((2*Sales Volume*Cost Per Run)/(Stock Expense Ratio+Interest Expense Ratio))
Option Premium
Go Option Premium = ((Share Option Warrant/Number of Securities Per Option Warrant)+(Purchase Price*100/Price Security-100))
Calculative Interest
Go Calculative Interest = (Nominal Value*Price)/(Number of Shares+Payment Per Share)
Conversion Parity
Go Conversion Parity = (Nominal Value*Price)/(Number of Shares+Payment Per Share)
Liquidity
Go Liquidity = (Liquid Assets+Accounts Receivable+Stock)/Short Term Payables
Agio
Go Agio = (Purchase Price)+Option Warrant Price/Exchange Ratio-Share Price
Effective Cash Discount Rate
Go Effective Cash Discount Rate = (Cash Discount Rate*360)/(Term for Payment-Cash Discount Period)
Cash Value
Go Cash Value = Amount or Long Lease*(Annual Interest Rate)/(100+1)/(Annual Interest Rate/100)
Interest Earnings Per Quarter
Go Interest Earning Per Quarter = (Assets)/(Credit Balance)*(Key Interest Rate-2)/400
Outperformance Point
Go Outperformance Point = (Share Price)*(Expected Return Until Expiration+1)-Dividend
Commercial Interest
Go Commercial interest = (Deposits*Annual Interest Rate*Period in Days)/(100*360)
Capitalised Earning Value of Property
Go Capitalised earning value of a property = (Net Rental Return Per Annum*100)/Rate of Capitalisation
Calculative Deduction
Go Calculative Deduction = (Replacement Cost-Declining Value)/Period
Annual Rent of Annuity
Go Annual Rent of Annuity = (Seed Capital-Finish Capital)/Period
Interest Charges Per Quarter
Go Interest Charges Per Quarter = (Credit)*(Key Interest Rate+1)/400
Intrinsic Value
Go Intrinsic Value = Share Price-Base Value

Annual Interest Rate with Discount Formula

Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period))
AIRD = (CDA*360)/((IA-CDA)*(TP-CDP))

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)).

FAQ

What is 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 and is represented as AIRD = (CDA*360)/((IA-CDA)*(TP-CDP)) or Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period)). 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, 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, Term for Payment describes a payment condition or agreement, particularly in business transactions & 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.
How to calculate 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 is calculated using Annual Interest Rate with Discount = (Cash Discount Amount*360)/((Invoice Amount-Cash Discount Amount)*(Term for Payment-Cash Discount Period)). To calculate Annual Interest Rate with Discount, you need Cash Discount Amount (CDA), Invoice Amount (IA), Term for Payment (TP) & Cash Discount Period (CDP). With our tool, you need to enter the respective value for Cash Discount Amount, Invoice Amount, Term for Payment & Cash Discount Period and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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