Question

Single discount rate equavalent to a series of discounts 20% and 25% is

Answer 1

The single discount rate equavalent is a discount of 40%.

Explanation:

The multiplier for a increase of a% is 1 + a/100.

The multiplier for a decrease of b% is 1 - b/100.

Discount of 20%:

20% decrease:

1 - (20/100) = 1 - 0.2 = 0.8

Discount of 25%:

1 - (25/100) = 1 - 0.25 = 0.75

Series of discounts(20% and 25%):

0.8*0.75 = 0.6

1 - 0.6 = 0.4

The single discount rate equavalent is a discount of 40%.