Vitralis delivers glazing to a property developer, which obtains control on delivery. The developer will pay EUR 121,000 in 2 years. Vitralis concludes, based on its judgement, that this payment schedule provides the customer with a significant benefit of financing; the rate that would be used in a separate financing transaction between the parties is 10% per year (case data). Compute the transaction price, i.e. the amount the developer would have paid in cash on delivery.
- Amount payable by the developer
- 121,000
- Payment period after delivery
- 2
- Rate of a separate financing transaction
- 10 %