Question

Atlas Hardware buys power tools with a list price of $25,500. If the supplier offers trade discounts of 10/20/5, find the trade discount amount. Use the single equivalent discount for your answer.

Answer 1

Answer:

$8058

Explanation:

10/20/5 stands for a series of discount rates applicable on the list price. It means on total amount, 10% discount is allowed, then post deduction of this 10%, a further 20% on the balance is allowed and then a further 5% is allowed on the balance.

In the given case, single equivalent discount would be calculated as follows,

$25,500 × 10% = $2550

Then, ($25,500 - 2550) × 20%= $4590

Then, ($25,500 - 2550 - 4590) × 5% = $918

Single equivalent discount amount = $2550 + 4590 + 918 = $8058