Subjects finance

Trade Discount 1B6973

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1. **Problem Statement:** Calculate the net payment and cash discount for a washing machine priced at 2100 with trade discounts of 8% and 5%, handling cost of 50, and cash discount terms 2/10, 1/20, n/30. 2. **Formulas and Rules:** - Trade discount is applied sequentially: first 8%, then 5% on the reduced price. - Net price after trade discounts = Original price \times (1 - 0.08) \times (1 - 0.05). - Add handling cost after trade discounts. - Cash discount terms 2/10 means 2% discount if paid within 10 days. - Cash discount amount = Net price \times cash discount rate. 3. **Calculate net price after trade discounts:** $$2100 \times (1 - 0.08) = 2100 \times 0.92 = 1932$$ $$1932 \times (1 - 0.05) = 1932 \times 0.95 = 1835.4$$ 4. **Add handling cost:** $$1835.4 + 50 = 1885.4$$ 5. **i. Net payment if paid within 10 days (2% cash discount):** Cash discount = $$1885.4 \times 0.02 = 37.708$$ Net payment = $$1885.4 - 37.708 = 1847.692$$ 6. **ii. Cash discount if buyer pays 1000 on 15th day (1% discount applies):** Cash discount rate for 15th day is 1% (since 1/20 means 1% if paid within 20 days). Cash discount on 1000 = $$1000 \times 0.01 = 10$$ **Final answers:** - Net payment within 10 days = 1847.69 - Cash discount on 1000 paid on 15th day = 10