Math 16269 – Week 1

Chapter 4 – Mathematics of Merchandising

4.1 Trade Discounts

Terms: Rate of trade discount (%)

Amount of trade discount / Discount amount ($)

1. Single Trade Discount

N = Net price
4-1 N = L (1-d) L = List Price
d = Rate of trade discount (%)
N≤L

Discount amount = dL

Example 1
List Price = $995.00
Discount rate = 16 2/3% = 0.166666
Find the discount amount and the net price.

2. Multiple Trade Discounts

4-2 N = Net price d1 = First trade discount

N = L (1-d1) (1-d2) (1-d3)
L = List Price d2 = Second trade discount
d3 = Third trade discount
Example 2
List Price = $324.00
d1 = 12%
d2 = 3%
d3 = 6%
Find the net price.

Note: Do not combine multiple discounts into one. This produces a smaller (and incorrect) answer.
N = $324.00 (1-0.21) = $255.96

How to make a Single Trade Discount Equivalent to Multiple Discounts

List price = $324

Net price = $259.97 (a few discounts were used to get this - 12%, 3%, 6%)

1. Amount of Discount = $324 - $259.97 = $64.03

2. Equivalent Discount = $64.03 X 100% = 19.76%
$324
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K. Vrhovnik
 Math 16269 – Week 1

Text Questions

Page 129 - #5

List price = ? Discount amount = $612.50

Discount rate = 35% Net price = ?

Page 129 - #9

List price = ? Discount amount = ?

Discount rate = 12.5% Net price = $2849.00

Page 129 - #14

List price = ? Discount amount = ?

Discount rate = 20%, 10%, 8 1/3 % Net price = $989.00

Page 129 - #19

The net price to a car dealer of a model with a manufacturer’s list price of $34,900 is $28,687.80. What
trade discount rate is the dealer being given?

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K. Vrhovnik
 Math 16269 – Week 1

Page 129 - #23

The net proceeds to the vendor of a house after payment of a 5.5% real estate commission were
$160,555.50. What price did the house sell for?

Page 130 - #32

An invoice shows a net price of $176.72 after trade discounts of 30%, 10%, and 2% have been deducted.
a) What was the list price of the goods?
b) What single discount rate would be equivalent to the discount series?

Homework: Page 129 (#1 – 23) odd numbers

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K. Vrhovnik