Cost of Trade Credit Question discount, beyond, period, credit, trade

prashantsahni

Does anyone know how to calculate the cost of trade credit using a BAII+?
The formula given in the LOS is Cost= (1 + (Discount/(1Discount)))^(365/Days beyond discount period)  1

dcfox83

It’s one of the questions on the PM portion on the mock. I didn’t even know how to read the question. 2/10, net 45?
#72

jim8z3

I learned it from the answer sheet
2/10 net 45 (2% discount if paid within 10 days. Otherwise pay within 45 days)
=[(1+(2/98))^(365/35)]1
calculate it in parts. i also fell from the sky when i saw this question. later when i checked in the answer sheet, it said that the CFAI considered replacing this question cause it was unfair but later decided to keep it. according to them, students can learn it this way.