Question

A product with an MSRP of $20.00 receives a trade discount of 25% and a volume discount of 10%. (a) What is its final net price? Answer = $ (rounded to nearest cent) (b) What is the single, equivalent discount rate? Answer = % (written as a percentage rounded to two decimal places)

Answer 1

The final net price of the product after a 25% trade discount and a 10% volume discount is $13.50. The single equivalent discount rate that represents the overall percentage reduction from the MSRP is 32.5%.

Step-by-step explanation:

The student asks about calculating the final net price of a product after applying a trade discount and a volume discount. To answer this:

1. First, calculate the trade discount: 25% of the $20.00 MSRP, which is $20.00 x 0.25 = $5.00.
2. Subtract the trade discount from the MSRP to get the price after trade discount: $20.00 - $5.00 = $15.00.
3. Next, calculate the volume discount on the discounted price: 10% of $15.00, which is $15.00 x 0.10 = $1.50.
4. Subtract the volume discount from the post-trade discount price to get the final net price: $15.00 - $1.50 = $13.50.

To calculate the single equivalent discount rate, we look at the overall percentage reduction from the MSRP. The MSRP was $20.00 and the final net price is $13.50.

The reduction is $20.00 - $13.50 = $6.50.

Thus, the single equivalent discount rate is ($6.50/$20.00) x 100%

= 32.5%.