Single Discount Rate Equivalent


When successive trade discount rates are offered, we call it Discount in Series. One way to evaluate it is the Single Discount Rate Equivalent (SDRE). Here, the bigger the single discount rate equivalent, the lesser is the net price.
The formula for determining SDRE is given as:
SDRE = 100% – [NPR1 * NPR2 * ...* NPRn]
where NPR is the net price rate.

Example 1: BM3+ Trading firm was offered an equipment with trade discounts of 15% and 10%. Find the single discount rate equivalent.

SOLUTION:
Given:
Rd1 = 15%
Rd2 = 10%

SDRE = 100% – [(100% - 15%)(100% - 10%)]
SDRE = 100% – [(85%)(90%)]
SDRE = 100% – [(0.85)(0.90)]
SDRE = 100% – 0.765
SDRE = 100% – 76.5%
SDRE = 23.5%

Exercises:
1. Compute the single discount rate equivalent (SDRE) of the ff. discount series. Express your answer in percent form.
A) 60% and 12%
B) 35%, 16% and 20%
C) 30%, 20%, 15% and 5%

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