Melissa, of Melissa\'s Lawn and Landscaping Service, needs to replace her powers
ID: 3141172 • Letter: M
Question
Melissa, of Melissa's Lawn and Landscaping Service, needs to replace her powers. She has ordered four new gas mowers, at $499 each, and a negotiated Trade Discount Rate of 9%, with terms of 2/10 EOM, and FOB Shipping Point. The seller has agreed to prepay the shipping charge of $80, which is not included in the invoice amount. The invoice from the manufacturer is dated April 26.
Determine:
A) By what date does Melissa have to pay in order to be able to take the cash discount?
B) What is the payment amount assuming that Melissa pays before the end of the discount period?
Explanation / Answer
A) By 10th of June if Melissa have to pay in order to be able to take the cash discount as date of invoice is after 25th april
B) 9% trade discount means, cost for mellissa per mower = 0.91 * 499 = $454.09
Also, if she pays within discount period then she gets 2% discount
She will pay = 0.98 * $454.09 = $445.0082
Total payment = 4* 445.0082 = $1780.0328
Add shipping charges of $80, so = $1780.0328 + $80 = $1860.0328