Wholesaler D is offering an item with trade discounts of 20% and 10% whereas Wholesaler H is offering the same item with trade discounts of 25% and 15%. Which wholesaler has the low net price if the list price of Wholesaler D is 10% less than that of Wholesaler H?
hmmm. They have told you that if the list price is x, then the marked-down prices are
D(x) = 0.80 * 0.90 = 0.72x
H(x) = 0.75 * 0.85 = 0.6375x
See what you can do with that...
To determine which wholesaler has the lower net price, we need to calculate the final price after taking into account the trade discounts.
Let's assume the list price of the item at Wholesaler H is $100 (100%).
Since the list price of Wholesaler D is 10% less than that of Wholesaler H, the list price of Wholesaler D is $100 - ($100 * 10%) = $90.
Now, let's calculate the final price at Wholesaler D:
First, we apply the first trade discount of 20%, which means we get a discount of $90 * 20% = $18.
The price after the first trade discount becomes $90 - $18 = $72.
Next, we apply the second trade discount of 10%, which means we get a discount of $72 * 10% = $7.2.
The final price at Wholesaler D is $72 - $7.2 = $64.8.
Now, let's calculate the final price at Wholesaler H:
First, we apply the first trade discount of 25%, which means we get a discount of $100 * 25% = $25.
The price after the first trade discount becomes $100 - $25 = $75.
Next, we apply the second trade discount of 15%, which means we get a discount of $75 * 15% = $11.25.
The final price at Wholesaler H is $75 - $11.25 = $63.75.
Comparing the final prices, we can see that Wholesaler H has a lower net price of $63.75 compared to Wholesaler D's net price of $64.8. Therefore, Wholesaler H offers the lower net price for the item.