GREAT Subject

This had been teach on 28/7/2008


Formula For Calculating Net Price

NP = L (1-r)

Let:
LP = net price
L = list price
r% = trade discount
From the net price = list price –trade discount, we get
NP = L – Lr
NP = L (1-r)

Examples:

1) The net price of a camera with 40% trade discount is RM480. What is the list price?

Let the list price be RM x. Hence,
Trade discount = 0.4x
Net price = list price – trade discount
480 = x – 0.4x
480 = 0.6x
x = 480/0.6
=RM800

Hence, the list price is RM800.00

Alternatively by using the formula, we get
Np = L(1-r)
480 = L(1-40%)
L = RM800

2) A bill of RM1200 in including a prepaid handling charge of RM200 is offered a trade discount 15%. What is the net price?

Trade discount = 0.15 x RM1000 = RM150
(It should be not that the discount is based on the cost of goods, excluding any other costs.)

Net price = (1000 – 150) + 200
= RM 1050


Chain Discount


In a chain discount, each discount rate is calculated on the successive net amount.

Example:

A radio is advertised for RM4800 less 20% and 10%. Find
(a) the net Price
(b) the total discount


List price = RM 4800
Less20% : 0.20 x RM4800 = 960 –
3840
Less10% : 0.10 x RM3840 = 384 –
= RM3456

Total discount = Em4800 – RM3456
= RM1344

It should be that the chain discount of 20% and 10% is not the same as 30% since the 10% is the based on the net amount (RM3840) after the first discount of 20% and not the list price of RM4800. If the single discount of 30 percent is given in example, the net price is 70% of list price: that is,

Net price = 70% x RM4800
= Rm3360

Thus, we see that the chain discount of 20% and 10% is less than a single discount of 30%.