Atlas Hardware buys power tools with a list price of $29,500. If the supplier offers trade discounts of 10/20/5, find the trade discount amount. Use the single equivalent discount for your answer.

Question

Quizplus · Accepted Answer

The single equivalent discount can be calculated by finding the complement of each discount (1 - discount rate) and then multiplying these complements together. For the given discounts of 10%, 20%, and 5%, the complements are 0.9, 0.8, and 0.95, respectively. Multiplying these together gives a single equivalent discount complement of 0.684. Subtracting this from 1 gives a single equivalent discount rate of 0.316 or 31.6%. Applying this to the list price of $29,500 results in a trade discount amount of $29,500 * 0.316 = $9,322.

Atlas Hardware Buys Power Tools with a List Price of $29,500