Trade and cash discounts. Mathematics of buying. List price. Trade discounts. Net price презентация

Learning Outcomes
Find the Net Price applying
a trade discount series and
using the net decimal
equivalent.
Find the Trade Discount
applying a trade discount
series and using the single
discount equivalent.
8-2

Trade discount series or chain discount
Additional discounts that are deducted one after another from the list price.
Trade Discount Series
Section 8-2
Key Terms…
Reasons to use discount series include:
To encourage volume purchases
To promote special or seasonal items
To attract new client

Trade discount series step by step
One way to calculate the net price is to make a series of calculations.
Find the net price applying a trade discount
series and using the net decimal equivalent
Trade Discount Series
8-2-1
Section 8-2
Complements are used to find net prices directly.
A faster method.

Trade discount series step by step
An item lists for $400 and has a discount of 20%.
$400 x 0.2 = $80; $400 - $80 = $320
Find the net price applying a trade discount
series and using the net decimal equivalent
Trade Discount Series
Section 8-2
HOW TO:
An additional discount of 10% is
taken on the previous price.
$320 x 0.1 = $32; $320 - $32 = $288
An additional discount of 5%
is taken on the previous price.
$288 x 0.05 = $14.40; $288 - $14.40 = $273.60
$273.60 is the final price.

Trade Discount Series
Section 8-2
Can you add the discounts
together and apply it as one?
If the item has three discounts of
(20% / 10% / 5%), can you add them
together and apply a 35% discount?
No!
Each time you apply the additional
discount, the base becomes smaller.
Directly applying a 35% discount would
result in a final price of $260.
$260 ≠ $273.60

Multiply the decimal form of the complement
of each trade discount rate in a series.
Multiply the list price by the net decimal equivalent.
Find the net decimal equivalent
Trade Discount Series
Section 8-2
HOW TO:
Using the complement method to find the Net Price

Find the net price of an order with a list price
of $800 and a trade discount series of 20/10/5.
Find the complement of each
of the trade discount rates.
They are 0.80, 0.90 and 0.95.
Multiply them together.
0.80*0.90*0.95= 0.684
The net decimal equivalent is 0.684.
Apply the net decimal equivalent to the list price.
NP = 0.684 x $800 = $547.20
An Example…
Trade Discount Series
Section 8-2

A refrigirator lists for $325 and has a trade discount series of 20/10/10. Find the net price.
$210.60
A dress lists for $125 and has a trade discount series of 15/10/7.5. Find the net price.
$88.45
Examples…
Trade Discount Series
Section 8-2

Single Trade Discounts
Section 8-1
HOW TO:
Find the single discount equivalent by subtracting the net decimal equivalent from 1.
Multiply the list price by the
single discount equivalent.
Use the trade discount
TD = single discount equivalent x list price
Use the single discount equivalent to calculate the trade discount on a $3,200 lawn tractor
with a discount series of 30/20/10.

An Example…
Trade Discount Series
Section 8-2
Use the single discount equivalent to calculate the trade discount on a $3,200 lawn tractor
with a discount series of 30/20/10.
Find the net decimal equivalent by multiplying
the complements of each discount rate.
0.70 x 0.80 x 0.90 = 0.504
Subtract the net decimal equivalent (0.504)
from “1” to find the single discount equivalent.
The result is 0.496 (or 49.6%).
The single discount equivalent is 0.496;
apply it to the price of $3,200.
TD = $3,200 x 0.496 = $1,587.20
The trade discount on the tractor is $1,587.20.
That is the amount that you do not pay.