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A vendor offers you an early payment discount. You will get a 2% discount if you pay the balance within 10 days. Otherwise, the full balance is due in 30 days. What is the effective interest rate earned on this discount?

% <-- Enter Discount Percentage
<-- Enter Discount Period
% <-- Enter Full term in Days
  
A vendor offers you an early payment discount.
You will get a 2% discount if you pay the balance within 10 days.
Otherwise, the full balance is due in 30 days.
What is the effective interest rate earned on this discount?

Effective Interest Rate on the Discount Formula is below:

This is stated as 2/10 net 30
Discount %
100 - Discount %
x
  
360
Balance Due Days - Discount Period Days

2%
100 - 2%
x
  
360
30 - 10

2%
98%
x
  
360
20%

Effective rate of interest = 0.020408163265306 x 18






How does the Vendor Discount Effective Rate of Interest Calculator work?

Free Vendor Discount Effective Rate of Interest Calculator - Calculates the effective rate of interest earned from a vendor discount for a prepayment of a balance within a certain amount of days for a percentage discount
This calculator has 3 inputs.

What 1 formula is used for the Vendor Discount Effective Rate of Interest Calculator?

  1. Discount %/(100 - Discount %) * 360/(Balance Due Days - Discount Period Days)

For more math formulas, check out our Formula Dossier

What 3 concepts are covered in the Vendor Discount Effective Rate of Interest Calculator?

discount
the amount by which the market price of a bond is lower than its principal amount due at maturity
interest rate
the proportion of a loan that is charged as interest to the borrower or proportion of principal credit given to a depositor
vendor discount
Discount percentage paid within m days, else the full price is due in n days

Example calculations for the Vendor Discount Effective Rate of Interest Calculator

  1. 2/10 net 30

Vendor Discount Effective Rate of Interest Calculator Video


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