The games publisher Pixelune buys the rights to a character licence from a studio, which agrees to be paid in a single instalment, 400,000, after two years, whereas its sales are normally settled at 30 days. No cash price is stated; the two-year discount factor, at the rate of equivalent financing, is 0.89 units. Calculate the cost of the licence and the total interest to be spread over the period of credit.
- Single payment in two years
- 400,000
- Two-year discount factor
- 0.89