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This had been teach on 30-7-2008

Formula For Calculating The Net Price For A Chain Discount

NP = L(1-r1)(1-r2)(1-r3)


Examples:

1) A television set with a catalog price of RM2500 is offered a chain discount of 30%, 10% and 5%. Calculate the net price.


From NP = L(1-r1)(1-r2)(1-r3), we get
= 2500 ( 1 – 30%) ( 1 – 10%) ( 1 – 5%)
= 2500 ( 0.7 ) ( 0.9 ) ( 0.75 )
= RM 1496.25


2) A washing machine is advertised at RM2000 less 40% and 12%

From NP = L(1-r1)(1-r2)(1-r3), we get
= 2000 ( 1 – 40% ) ( 1- 12% )
= 2000 ( 0.6 ) ( 0.88 )
= RM 1056























Single Discount Equivalent

r = 1 – r( 1- r1) (1 – r2) (1 – r3)



Example:

1) A product is advertised at RM1500 less 20%, 10% and 5%. Find
(a) the single trade equivalent
(b) the net price


From r = 1 – r( 1- r1) (1 – r2) (1 – r3), we get
(a) singe discount equivalent = 1- ( 1 – 0.20 ) ( 1- 0.10 ) ( 1 – 0.05 )
= 1 - ( 0.80 ) ( 0.90 ) ( 0.95 )
= 1 – 0.84
= 0.316
= 31.6%
(b) From NP = L(1-r), we get
= 1500 ( 1 – 31.6% )
= RM 1026


2) Find the single discount equivalent of 10% and 3%.




From r = 1 – r( 1- r1) (1 – r2) (1 – r3), we get
r = 1 ( 1 – 10% ) ( 1- 3% )
=12.7%











Cash Discount

Example:

1) Explain the cash discount terms
(a) 2/10, 1/30, n/60 (b) net 30


(a) This term means 2% of the net price my be deducted if the invoice is paid within 10 days of the date of the invoice; 1% may be deducted if the invoice is paid between 11th and 30 day; and the full amount must be paid by the 60th day. After the 60th day the bill is overdue.
(b) Net 30 means payment is due within 30 days of the invoice date.


2) An invoiced dated 10 April 2005 for RM2300 was offered cash discount term of 3/10, 2/20, n/60. Find the payment if the invoice was paid on 28 April 2005.

Since the invoice was paid 18 day after the date of the invoice, a cash of 2% was obtained. The buyers did not gets the 3% cash discount as the invoice was not paid within the 3% discount period within of 10 day

Net payment = net price – cash discount
= 2300 – ( 0.02 x 2300 )
= RM2254

The amount of payment was RM2254.