haya.Learning made clear
Simple interest and discounts sheet
Essay frame

A retailer buys goods listed at Rs. 150,000 with trade discounts of 20% and 10%, on terms 2/10, n/30. (a) Find the net invoice price. (b) Find the amount paid on day 8. (c) Find the single equivalent discount. (d) Is it worth borrowing at 12% simple interest for 20 days to take the cash discount?

How to lay out the answer. Follow the frame, then write it in your own words.

  1. 1 · Apply the trade discounts in turn. 150,000 × 0.8 = 120,000; × 0.9 = Rs. 108,000.
  2. 2 · Apply the cash discount. Day 8 is within 10 days: 108,000 × 0.98 = Rs. 105,840 (saving Rs. 2,160).
  3. 3 · Single equivalent discount. 1 − 0.8 × 0.9 = 0.28 = 28%.
  4. 4 · Cost of borrowing. To pay on day 10 instead of day 30, borrow 105,840 for 20 days: I = 105,840 × 0.12 × 20/365 = Rs. 695.93.
  5. 5 · Compare. Saving 2,160 − cost 695.93 = Rs. 1,464.07 better off.
  6. 6 · Business link. Sri Lankan retailers who borrow short-term to take cash discounts can cut their buying cost.
  7. 7 · Conclude. Yes: borrowing to take the discount is worth it.