1. BUSINESS MATHEMATICS
&
STATISTICS

2. Financial Mathematics Part 1
LECTURE 14
Review Lecture 13
Financial Mathematics Part 1

3. SERIES DISCOUNT
This refers to the giving of further discounts as incentives for more sales
Example
15% off first
Then… 10% off next
Then … 5% off next
Total discount not 30%

4. The series discounts are
Trade Discount
The price of
office furniture is
Rs. 20,000
The series discounts are
20%,10%, 5%
What is the net price?

5. Trade Discount N = L(1 – d) N = (1-d1) (1-d2) (1-d2)
= 20,000(1-.2)(1-.10)(1-.05)
= 20,000(.8)(.9)(.95)
= 20,000(.6840)
= 13,680

7. LIST PRICE?
An order for power tools has a Rs net price after a 30% trade discount. What is the list price?
Net Price = L(1 – d)
L = N/(1 – d)
= 2100/(1 – .3)
= 2100 /(.7)
= 3000 Rs.

9. TRADE DISCOUNT Find the single discount rate
that is equivalent to the series
15%, 10% and 5%.
Net Price N = L(1 – d)

10. Apply the multiple discounts to a List price of Rs.100
TRADE DISCOUNT
Apply the multiple discounts to a List price of Rs.100
N = 100(1-d1)(1-d2)(1-d3)
15%, 10%, 5%
=100(0.85)(0.9)(0.95)
= 100(0.7268)
= 72.68%
% Discount = %
= 27.62%

13. TRADE DISCOUNT The price of car parts is Rs. 20,000.
The series discounts are
20%, 8%, 2%.
What is the single equivalent discount rate?

14. TRADE DISCOUNT =100(0.8)(0.92)(0.98) = 100(0.7213) = 72.13%
= 27.87%
Rs. Discount = (0.2787)(20000)
= 5,574 Rs.

16. A discount given for the prompt payment of an account
CASH DISCOUNT
A discount given for the prompt payment of an account
No Cash Discount
Invoice
Returned Goods
Freight
Sales Tax
&
Trade Discounts

17. CASH DISCOUNT Discount Periods
Period for buyer to take advantage of Discount Terms
Credit Periods
Period for buyers to pay invoices

18. CASH DISCOUNT Invoice Dated May 3 Terms 2/10
Discount 2% if invoice paid upto 10 May
then discount can be claimed

19. CASH DISCOUNT
What is the net payment for invoice value of Rs. 50,000 if paid upto 10 May?
N = L(1 – d)
= 50,000(1-0.02)
= 50,000(0.98)
= 49,000 Rs.

21. BUSINESS MATHEMATICS
&
STATISTICS