Chapter 5 - Trade and Cash Discounts

This chapter is about discounts that was given to
attract more customer.

Formula and calculating net price

NP=L(1-r)

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


Formula for calculating the net price for a chain discount

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

list price=L
net price after first discount=L-Lr1
=L(1-r1)
net price after second discount=L(1-r1)-L(1-r1)r2
=L(1-r1)(1-r2)
net price NP=L(1-r1)(1-r2)(1-r3)


Single discount equivalent

r=1-(1-r1)(1-r2)(1-r3)