TRADE AND CASH DISCOUNTS

I love this topic. It is easy for me to understand the whole concept. Thanks to Miss Ch’ng who taught me well. For the first, we learn how to find the trade discount. It is easy.

Trade discount = list price – net price

Example:

Given the list price is RM180 and trade discount given is 30%. The net price will be…

Trade discount = 30% x RM180
= RM54

Trade discount = Net price - List price
RM54 = X - RM180
X = RM126

I have got the answer. Look. It is really easy, right?
Then, FORMULA FOR CALCULATING NET PRICE.

NP = L (1 - r)

Another example.
The net price of a handphone with 40% trade discount is RM480. What is the list price?
Solution

Let the list price be X.
Trade discount = 40% or equal to 0.04 when divided by 100%
Net price = List price – trade discount
480 = X – 0.4X
480 = 0.6X
X = 480/0.6
= RM 800

So let’s try use the formula of NP = L (1 - r)

NP = L (1 - r)
480 = L (1 – 0.04)
L = RM800