Discounts
Discounts are reductions in the selling price of an article or the amount of a bill. Discounts are expressed as rates or percents.
The list price of an article is the original price. The net price is the list price minus the discount.
To find the amount of a discount,
multiply the list price, or base, by the rate of discount.
Formula: P = B x R
Example: A used car listed at $925.00 was sold at a discount of 10%. Find the discount.
B = $925, R = 10% P=?
P = B x R; P = $925 x .10 = $92.50
To find the net price, subtract the amount of the discount from the original or list price.
Formula: D = B - P.
Example: A file cabinet was listed at $62.50. Find the net price if the discount was 12%.
D = ? P=? R=12% B = $62.50.
P = B x R = $62.50 x .12. B = $7.50.
D = B - P = $62.50 - $7.50
= $55.00 net. - Answer
Alternate Solution: Instead of multiplying the list price by the percent discount and deducting the result, a short method is to deduct the percent discount from 100% and multiply the remainder by the list price to get the net price directly. Thus in the same example we have:
100% - 12% = 88%;
62.50 x .88 = $55.00 - Answer
Chain Discounts
Chain discount is the term used when more than one discount is given. Thus, when two or more discounts are given, the second discount is taken off what remains after the amount of the first discount has been deducted from the list price. The same process is continued in cases where three or more discounts are allowed.
Example:
| $400 | x | 1/5 | = | $80 |
| - 80 | ||||
| $320 | x | 1/10 | = | $32 |
| - 32 | ||||
| $288 | x | 1/20 | = | $14.40 |
| - 14.40 | ||||
| $273.60 | net price - Answer | |||
A shorter way to do this example: Discounts of 20%, 10% and 5% mean selling at 80%, 90% and 95% of the list price; expressed decimally they are .8, .9 and .95. Multiply these in succession .8 x .9 x .95 = .684.
| List price | $400 | |
| Net price per dollar | .684 | multiplying .684 x 400 |
| $273.60 | net selling price - Answer |
