Question

Compute the cost of not taking the following trade discounts:

1. 3/10, net 30 (MC 20)
2. 1/10, net 30 (MC 51)
3. 4/10, net 90 (MC 52)
4. 4/10, net 25 (MC 53)

Answer 1

Answer- cost of not taking trade discount

= %discount/(100-discount%)X total number of days in a year/ number of days between early payment date and normal date.

(a). 3/97 X 365/20

=0.56 or 56%

(b). 1/99 X 365/20

=0.18 or 18%

(c). 4/96 X 365/80

=0.19 or 19%

(d). 4/96 X 365/15

=1.01 or 101%