Answer the following questions in full.

1. Explain the difference between a trade discount and a cash discount.

 

2. Give a mathematical example of a trade discount, whereby the original price is $150.00, and it is discounted by 20% if you buy 10 units. How much will you pay for the 10 units? What is the average price for 1 unit?

 

3. Give a mathematical example of a double trade discount, whereby the original price is $200.00, and it is discounted by 20% if you pay 10 units, and then it is discounted and additional 10% if you buy 20 units. (This requires two calculations).

 

4.  
1. How much will you buy 10 units?
2. What is the average price for 1 unit under the first scenario?
3. How much will you pay for the 20 units?
4. What is the average price for 20 unit?

 

5. One example of a Cash Discounts is to receive a 2% discount off of the net price of merchandise if one pays within 10 days (2/10, n30). Based on this scenario, a merchant offers you 2/10, n30 on a $30,000 purchase made on 9/1.
1. If you pay your bill on 9/7, how much will you owe?
2. If you pay your bill on 9/27, how much will you owe?
3. Give a brief explanation in the savings and how this is a good opportunity for both the buyer and the seller?

 

6. You are a purchasing agent at ABC Inc. You recently made a discounted purchase of $45,000 on a $60,000 item.
4. Calculate the percentage discount you received on this purchase.
5. Also, show the formula used in your calculation.