Calculating Interest, payment date, etc from invoice terms

Nikki111

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Mar 16, 2007
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Ok this seems like it should be real simple but I have no idea what i am doing..
:oops:

7.)You have purchased $10,000 worth of goods. The dealer is giving you terms of 2/10, n/30. You were billed on July 7.

A.What is the last date the payment can reach the dealer without being delinquent?

B.What is the last date that you are eligible for the discount?

C.If the discount is taken, how much will be paid to the dealer?

D.If you go to the bank on day 10 to borrow the amount needed to pay the dealer at 8.5% interest, how much will you owe the bank? (principal and interest)

E.How much did you save by borrowing money to take advantage of the cash discount
 
Re: Calculating Interest

Nikki111 said:
Ok this seems like it should be real simple but I have no idea what i am doing..
WHY do you have "no idea"?

Hint: "2/10" means 2% off if paid within 10 days

Can you calculate 2% of $10,000 ?
 
Nikki111 said:
I have no idea what i am doing.
If you really "have no idea" what is going on in this exercise, then I'm afraid you need more help than we can provide.

The volunteers can help students work through questions, but this assistance assumes that the student has at least a basic grasp of the underlying material. We cannot teach the week or two of classes that would be necessary to provide that underlayment. Sorry.

Please consider hiring a tutor with whom you can work, face-to-face, on a daily basis (or at least a few days a week). A qualified tutor can take you through your textbook and your classnotes, and re-teach the missing chapter(s).

My best wishes to you.

Eliz.
 
Yeah i can do that its 200

Eliz.....I am taking an online class NO TEXT it career math and its through a college in our hometown in colorado and we are currently stationed in Nebraksa( with the army) and no college in this town so I cant hire a tutor or I would :( I'm not on here trying to get answers but i thought this was FREE MATH help so why wouldn't people be able to help me through it?
 
We have this conversation occasionally. I am not an official spokesman, but I'll give it a shot.

This is a Free Math site and we can help. We cannot teach entire courses of instructions. Our emphasis is on specific questions after reviewing the students efforts.

You are the one asking for help. This means inherently that you are not the best judge of what kind of help is needed. You have come to us for this sort of determination. When you get an answer, read it carefully, don't just object to it. It is likely that you have obtained useful information.

If you truly have no idea how to proceed, something is very wrong and it isn't us. This should not ever be the case in a rational and appropriate course design. If your course materials have left you in this position, it is possible you are not where you want to be and you might need to reconsider your present situation. If you have paid a fee for where you are, those funds may be lost to very little benefit. Without a very thorough examination of the specific program design, it is very difficult to state that it is actually "bad", so I won't do that.

We are all volunteers, folks who care about mathematics and want to help others. Some have decades of classroom experience. Even if we are a little cranky (usually just me), cut us some slack and let's see if we can learn some mathematics.

Did I mention, Welcome!
 
Nikki111 said:
I am taking an online class NO TEXT...
We hear so many bad things from posters regarding online math courses. I'm sorry to learn that you're in such an awkward position.

While we can help students work through specific exercises, this assistance depends upon the student having a basic grasp of the underlying material. You had indicated that you had no knowledge on this topic (which, with no textbook or classroom lessons, is certainly understandable). Unfortunately, we are not able, within this environment, to replace the missing classroom and textbook instruction.

If you would like to attempt self-study (and it sounds to me as though this online "school" has pretty much left you to your own devices), then the following may be helpful:

. . . . .Wikipedia: Discounts & Allowances

. . . . .About.com: Cash Discounts

. . . . .Cash Discounts: The Loan Sharks of Distribution

. . . . .About.com: Business / Financial Math Tutorials & Courses

. . . . .College Cram: Study Business Math (free)

Having taught a business-math course, I know how long and involved the exercises can be (and how hard it is to find anything very helpful online). Step-by-step explanations in class, supported by worked examples in a textbook, are, in my opinion, crucial necessities for this material. But if the above links suffice to get you started, then:

A) The last valid payment date is calculated from the "n/30" notation.

B) The last valid discount date is calculated from the "2/10" notation.

C) The discount is given by the "2/10" notation. So find that percent of the ten thousand dollars, and subtract this from the payment amount.

D) Take the value from (C), and calculate the ending value (after the remaining twenty days) that you will owe.

E) Compare the value in (D) to the full invoice amount.

My best wishes to you in your studies.

Eliz.
 
Thanks so much for the links. And I did not intend to make anyone "cranky" :oops: I was just seeing if maybe someone could help me with the formulas for this type of question...Sorry again didn't mean to ruffle any feathers. I have been taking online classes through the community collge for 2 years now ( trying to pursue a degree in nursing) and this math class has been the most difficult for myself., 1. I am not a mth person and two not having a text is causing a reall challenge. I don't know why they would have some kind of text for this class or book with formulas I don't know but its my one and only math class so just trying to get through it agian thnaks for all the help!
 
You might try your local library or book dealer for books on the topic. For instance, I've found Schaum's Oulines to be very straightforward and no-nonsense, and this series has books on Basic Business Math and Bookkeeping and Accounting which might be useful.

But I agree with you: The college should have provided a text selection for this course!

Eliz.
 
Nikki111 said:
I did not intend to make anyone "cranky"
No worries. Once you get to know me a little better, you will see that I'm usually cranky. It just can't be your fault.

It is important to be aware that language may not be consistent from one environment to another. "giving you terms of 2/10" may not be understood at all, for example. Try to be as complete and descriptive as you can. Assuming a specific term is understood the same by everyone usually is not a good choice.

Part D needs a time period, doesn't it?
 
A. What is the last date the payment can reach the dealer without being delinquent?

August 6 would be deliquent because 30 days from july 7 would august 5th but the 31 days would be August 6th making it delinquent.

B. What is the last date that you are eligible for the discount?

July 16th is the last date
Within 10 days so 7,8,9,10,11,12,13,14,15,16, so this is 10 days.

C. If the discount is taken, how much will be paid to the dealer?

.02x10,000=200
10000-200=9800

D. If you go to the bank on day 10 to borrow the amount needed to pay the dealer at 8.5% interest, how much will you owe the bank? (principal and interest)

9800x8.5=833.00
833.00+9800=10,633
A=10,633

E. How much did you save by borrowing money to take advantage of the cash discount?

10633-10000=633
So I lost 633.00
So I didn’t save any money I would have been better off taking the 30 day delayed payment option.
 
Nikki111 said:
A. What is the last date the payment can reach the dealer without being delinquent?

August 6
To my knowledge, you don't count the billing day, but days after the billing date. July 8th is one day after the billing date. July 18th is eleven days after. July 28th is twenty-one days after. So the 31st is the twenty-fourth day after. This gives you six more "safe" days, so August 6th is still okay.

Nikki111 said:
B. What is the last date that you are eligible for the discount?

July 16th is the last date
As long as payment is made on or before the tenth day after the billing date, you can take the discount.

Nikki111 said:
C. If the discount is taken, how much will be paid to the dealer?

.02x10,000=200
10000-200=9800
Yes.

Nikki111 said:
D. If you go to the bank on day 10 to borrow the amount needed to pay the dealer at 8.5% interest, how much will you owe the bank? (principal and interest)

9800x8.5=833.00
833.00+9800=10,633
A=10,633
I think you forgot to include the term of the loan: twenty days, or 20/360 (or 20/365) of a year (depending on how your class is counting the length of a year).

Eliz.
 
...and a little notation problem.

You got 2% = 0.02, but seem to have missed that 8.5% = 0.085.
 
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