Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:**Complete the following table:** *(Do not round net price equivalent rate and single equivalent discount rate. Round the dollar amounts to the nearest cent.)*
| Item | List price | Chain discount | Net price equivalent rate (in decimals) | Single equivalent discount rate (in decimals) | Trade discount | Net price |
|-----------------------|------------|----------------|----------------------------------------|----------------------------------------------|----------------|-----------|
| Samsung Blu-ray player| $197 | 7/3/2 | | | | |
**Explanation for Educational Purposes:**
This table is designed to help calculate the net price of an item after applying a series of discounts, known as chain discounts. The item in question is a Samsung Blu-ray player with a list price of $197. The chain discount of 7/3/2 means sequential discounts of 7%, 3%, and 2% are applied.
**Terms:**
- **Net price equivalent rate:** This is the cumulative effect of applying the chain discounts.
- **Single equivalent discount rate:** This is a single discount rate that has the same effect as applying the chain of discounts sequentially.
- **Trade discount:** The total discount amount subtracted from the list price.
- **Net price:** The final price after all discounts are applied.
The table requires filling in the calculated values for net price equivalent rate, single equivalent discount rate, trade discount, and net price.
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