Best answer: What is a single discount rate and how does it apply to chain discounts?

In order to be able to compare the total discount received from applying a series of chain discounts, a single equivalent discount or SED can be calculated. What this means is that chain discounts quoted as 25/10/5/2 are equivalent to a single discount rate of 37.2%.

How do you calculate a single discount rate?

To find the trade discount by applying a trade discount series and using the single discount equivalent:

  1. Find the single discount equivalent by subtracting the net decimal equivalent from “1.”
  2. Multiply the list price by the single discount equivalent.

What is single discount?

of the first discount. In this case, the first discount of 10% reduces the price of 100 to 90. The second discount of 15% will be on the amount of 90, which is. Therefore, the successive discounts add up to = 23.5%(Option D) as a single discount.

What is a chain discount?

: a series of discounts allowed from the list price of an article of merchandise.

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What is the discount rate formula?

How to calculate discount rate. There are two primary discount rate formulas – the weighted average cost of capital (WACC) and adjusted present value (APV). The WACC discount formula is: WACC = E/V x Ce + D/V x Cd x (1-T), and the APV discount formula is: APV = NPV + PV of the impact of financing.

What is the markup formula?

Simply take the sales price minus the unit cost, and divide that number by the unit cost. Then, multiply by 100 to determine the markup percentage. For example, if your product costs $50 to make and the selling price is $75, then the markup percentage would be 50%: ( $75 – $50) / $50 = . 50 x 100 = 50%.

What is equivalent rate of discount?

The single equivalent discount is a single trade discount that equates to all the discounts in a series or chain. Equivalent Discount = (A + B) – (AB/100) where A = First Discount, B =Second Discount. Equivalent Discount = (20 + 10) – (20*10)/100. Also Know, what is the net price equivalent rate?

What is equivalent discount percentage?

Equivalent Discounts. Equivalent discount. Discounts, as we all know, is the deduction on the price of the items. It is always calculated on the marked price. Similarly equivalent or successive discounts are more than one discount that is given to the customers.

What discount is equivalent to two successive discount of 20% and 15%?

Answer: ans: 32% see the explanation in the above image.

Which is a better buy for a customer single discount of 45% or successive discounts of 20% and 25%?

Answer: 25% direct discount is better for customer.

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What single discount is equal to successive discounts of 20% and 10 %?

Here, we will first assume any number of which will find the two successive discounts. So, we will assume that number to be 100. Thus, successive discounts i.e. 20% and 10% on 100 is 72. Thus, the answer is 28%.

What is a chain discount and how is it calculated?

20% of first net price is deducted from first net price to yield second net price. 15% of second net price is deducted from second net price to yield final net price. 3 For Example Retail price is $400. Chain discount is 30% less 25%.

What is credit discount?

Discount credit is a technique used to realise receivables in order to deal with cash flow shortages resulting from the terms of payment given by businesses to their customers. … The administrative burden associated with discount credit means that it is seldom used and that factoring is opted for instead.

What is sale discount?

A sales discount is a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer. A sales discount may be offered when the seller is short of cash, or if it wants to reduce the recorded amount of its receivables outstanding for other reasons.

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