My Math Forum  

Go Back   My Math Forum > Science Forums > Economics

Economics Economics Forum - Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance

LinkBack Thread Tools Display Modes
July 30th, 2019, 04:56 AM   #1
Joined: Jul 2019
From: Jakarta

Posts: 1
Thanks: 0

Simple Interest Rate

John receives an invoice for USD 1000 with payment due within 30 days. The terms of payment allow for a discount of 2.5% if the bill is paid within 7 days. He borrows USD 975 to take advantage of the discount. What is the largest simple interest rate that John would be willing to pay the loan?
Joel5575 is offline  
July 30th, 2019, 10:36 AM   #2
Global Moderator
Joined: Dec 2006

Posts: 20,921
Thanks: 2203

If the annual simple interest rate is 935.71%, the interest is \$975*9.3571/365 per day, which is \$24.99 after rounding, so John still benefits by \$0.01 by taking the loan on day 7 and repaying the loan the next day.
skipjack is offline  
July 30th, 2019, 11:32 PM   #3
Senior Member
Joined: Apr 2014
From: UK

Posts: 953
Thanks: 340

Is the idea that John is supposed to still end up paying \$1000? I didn't get that at all, lol, as I read it, 0% and I pay \$975 thankyou very much!

Last edited by greg1313; July 31st, 2019 at 12:34 AM.
weirddave is offline  

  My Math Forum > Science Forums > Economics

interest, rate, simple

Thread Tools
Display Modes

Similar Threads
Thread Thread Starter Forum Replies Last Post
Calculating Simple Interest Rate Per Annum Zoheba Economics 6 March 20th, 2014 09:14 PM
Simple Interest: How to find the actual interest rate? grace25 Elementary Math 12 January 24th, 2013 08:46 PM
Simple interest/Compound interest Qwertyqwerty Elementary Math 2 September 20th, 2011 10:41 PM
Not another Interest Rate.. noob2themax Calculus 1 August 7th, 2011 07:01 PM
Calculate interest rate based on interest in parcels douglasrac Economics 0 February 17th, 2011 09:14 AM

Copyright © 2019 My Math Forum. All rights reserved.