Answer to Question #85045 in Finance for Edmund Cox

Question

If American Express, in their investor relations report describe their worldwide transaction volume as $1.1 trillion, and say their average discount rate is 2.43%, how do they arrive at a discount revenue of around $19 billion, as opposed to around $27 billion (i.e. 2.43% of 1.1 trillion)?

Answer 1

If American Express, in their investor relations report describe their worldwide transaction volume as $1.1 trillion, and say their average discount rate is 2.43%, then they can arrive at a discount revenue of around $19 billion, as opposed to around $27 billion (i.e. 2.43% of 1.1 trillion) if they use lower than average discount rate to calculate their discount revenue.