biz math : CHAPTER 5 – TRADE AND CASH DISCOUNT

Trade discount = list price – net price
Amount of trade discount = list price x trade discount rate


Formula for calculating net price
NP = L(1-r)

NP = net price
L = list price
r% = trade discount
from net price = list price – trade discount, we get
NP = L – Lr
NP = L (1- r)

Multiple discounts are offered to the retailers on the same goods by the manufacturers or wholesalers. It is termed as chain discount or series discount

Formula for calculating the net price for a chain discount

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

Single discount equivalent
- a single discount equivalent is a single which is equivalent to a chain discount, the single discount equivalent, r, for a chain discount of r1, r2 and r3 is given by
r = 1- (1-r1)(1-r2)(1-r3)
trade and cash discount