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Study Note #4-Discounts

This lesson covers the concept of discounts in business mathematics, specifically focusing on single-trade discounts and discount series. It explains two types of discounts: trade discounts offered by manufacturers or wholesalers and cash discounts for immediate payment. The document provides formulas for calculating trade discounts and net prices, as well as examples of cash discount terms.

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4 views2 pages

Study Note #4-Discounts

This lesson covers the concept of discounts in business mathematics, specifically focusing on single-trade discounts and discount series. It explains two types of discounts: trade discounts offered by manufacturers or wholesalers and cash discounts for immediate payment. The document provides formulas for calculating trade discounts and net prices, as well as examples of cash discount terms.

Uploaded by

Anthony17 Mapoy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Business Mathematics – Grade 11-ABM

Lesson 4-Discounts
Objectives:
● At the end of this lesson, you should be able to illustrate how to
compute single-trade discounts and discount series
[ABM_BM11BS-Ih-5 (M)].

Discount
● A discount is an amount deducted from the selling price of a
product or service. There are two types of discounts:
○ The manufacturer or wholesaler offers a trade discount to
encourage resellers (customers) to purchase a product.
■ It usually states a specific amount or percentage
discount.
○ Formulas to Use:

Missing Formula

Trade Discount 𝑇𝐷 = (𝐿𝑃) 𝑅𝑇𝐷 ( )


Net Price 𝑁𝑃 = 𝐿𝑃 − 𝑇𝐷

(
𝑁𝑃 = 𝐿𝑃 − 𝐿𝑃 − 𝑅𝑇𝐷 )

Where:
● 𝑇𝐷 is the trade discount,
● 𝐿𝑃 is the list price or original price,
● 𝑅𝑇𝐷 is the trade discount rate, and

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Business Mathematics – Grade 11-ABM

● 𝑁𝑃 is the net price.

○ A cash discount is a discount that persuades consumers to


pay in cash immediately or within a specified time.
■ The number of cash discounts will depend on the
dating methods and the terms of the date of
payment stated.
■ For example:
● Terms of payment can be , , or ,
10 5 𝑛
15 30 60
whereas:
means 10% discount will grant if
10
○ 15
payment finishes within 15 days after the
date of purchase,
means 5% discount will grant if
5
○ 30
payment finishes within 30 days after the
date of purchase, and
means the customer will pay the net
𝑛
○ 60
amount of purchase 𝑛 in full within 60
days.

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