Your parts supplier gives you one-quarter of a year to pay for parts ordered today,or offers you a discount if you pay cash at purchase.You have just purchased $94,500 worth of parts from your supplier and the discount is at an annual rate of 10%.How much will you pay for the parts if you pay today?
A)$94,500
B)$94,275
C)$94,144
D)$93,875

Question

Quizplus · Accepted Answer

The discount is at an annual rate of 10%, which means for a quarter of a year (or 3 months), the discount rate is 2.5% (10%/4 = 2.5%). To calculate the discounted price, we use the formula:

Discounted price = Original price - (Original price x Discount rate)

Discounted price = $94,500 - ($94,500 x 0.025)
Discounted price = $94,500 - $2,362.50
Discounted price = $92,137.50

Therefore, if you pay cash today, you would pay $92,137.50 for the parts, which is option B.

Your Parts Supplier Gives You One-Quarter of a Year to Pay