Ans :- Periodic discount rate (p) = 3%
No of periods (m) = 365 / 20 = 18.25
Annual interest rate = P×M = 3 × 18.25 = 54.75%
Solution:-
a) If bill make the payment immediately then the amount he need to borrow = $( 330000×97%) = $320100
Amount of payment he need to make at end of 60 days along with the interest on borrowing
= $ 320100+ 320100×11%×60/365 Days
= $325888.10
b) If he don't borrow and make payment on due date, then the amount of outflow
=$330000
Bill Norman comes to you for advice. He has just purchased a large amount of Inventory...
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