Question

Compute the amount to be paid for each of the four separate invoices assuming that all invoices are paid within the discount period?

Answer 1

To calculate the payment amount for each invoice within the discount period, calculate the total cost, apply the discount as per Table C1 to find the present discounted value, and then aggregate these values for each invoice.

Step-by-step explanation:

To compute the amount to be paid for each of the four separate invoices, assuming that all invoices are paid within the discount period, you need to follow these steps:

1. Begin by calculating the total cost of buying the basket in each time period using the provided information in the table.
2. Refer to Table C1 to calculate the present discounted value of future profits. This involves applying a formula that typically includes the cash flow at each time period and a discount rate.
3. Apply the discount offered for payment within the discount period to the total cost calculated in step 1.
4. Finally, sum up the present discounted value of each invoice to determine the total amount to be paid if all invoices are settled within the discount period.