Planning Ahead

Inventory is an important part of many businesses.

Can you think of problems that might arise from having too much or too little of a product in stock?

Lesson Objective

Compute the trade discount, the net price, and the trade-discount rate.

Content Vocabulary

list pricelist price

The price at which a business generally sells an item, also called the catalog price.

list price

The price at which a business generally sells an item, also called the catalog price.

trade discount

trade-discount rate

net price

trade discount

A discount from the list price.

trade discount

A discount from the list price.trade-discount rate

The amount of the discount of an item expressed as a percentage of the list price.

trade-discount rate

The amount of the discount of an item expressed as a percentage of the list price.

net price

The price actually paid for a discounted item.

net price

The price actually paid for a discounted item.

Johnson Auto Repair Shop is purchasing an electronic ignition module for a sport coupe that is six years old. The list price in the wholesaler’s catalogue is $845.

Johnson receives a 40 percent trade discount.

What is the net price of the module?

Example 1Example 1

Find the trade discount.

List Price × Trade-Discount Rate

$845 × 40% = $338.00

Example 1 Answer: Example 1 Answer: Step 1Step 1

Find the net price.

List Price – Trade Discount

$845.00 – $338.00 = $507.00

Example 1 Answer: Example 1 Answer: Step 2Step 2

Murray Plumbing receives an 18 percent trade discount from their wholesale supply company.

The list price on an item that Murray needs to purchase is $145.79.

What is the net price?

Practice 1Practice 1

$119.55

Practice 1 AnswerPractice 1 Answer

Find the trade discount and the net price.

List price: $105.59

Trade-discount rate: 32 percent

Practice 2Practice 2

Trade discount: $33.79

Net price: $71.80

Practice 2 AnswerPractice 2 Answer