A Model M3SWE mandolin has a list price of $1299.90, with a chain discount of 5/3/2. (A) What would be the trade discount amount? (B) What would be the net price?
To calculate the trade discount amount and the net price, we first need to understand what a chain discount is. A chain discount is a series of discounts applied one after the other. In this case, the chain discount of 5/3/2 means that the discounts are applied in three steps: 5%, 3%, and 2%.
(A) To find the trade discount amount, we need to calculate the total discount as a percentage of the list price. We'll calculate each step of the chain discount separately.
Step 1: Calculate the first discount of 5%:
Discount 1 = 5/100 * List Price = 5/100 * $1299.90
Step 2: Calculate the second discount of 3% on the discounted price after the first discount:
Discount 2 = 3/100 * (List Price - Discount 1)
Step 3: Calculate the third discount of 2% on the discounted price after the second discount:
Discount 3 = 2/100 * (List Price - Discount 1 - Discount 2)
Now, we can find the trade discount amount by adding up all the discounts:
Trade Discount Amount = Discount 1 + Discount 2 + Discount 3
(B) To find the net price, we need to subtract the trade discount amount from the list price:
Net Price = List Price - Trade Discount Amount
Let's calculate the answers step by step:
Step 1:
Discount 1 = 5/100 * $1299.90 = $64.995 (rounded to $65.00)
Step 2:
Discount 2 = 3/100 * ($1299.90 - $65.00) = $38.85
Step 3:
Discount 3 = 2/100 * ($1299.90 - $65.00 - $38.85) = $21.548 (rounded to $21.55)
Trade Discount Amount = $65.00 + $38.85 + $21.55 = $125.40
Net Price = $1299.90 - $125.40 = $1174.50
Therefore, the trade discount amount is $125.40, and the net price is $1174.50.