Bernie’s Bike Shop receives the following trade discounts: 35/25/15. The vendor’s price list indicates that 35 percent off list price is for purchasing bikes in quantities of 100 or more, 25 percent off list price is for assembling the bikes for customers, and 15 percent is for sales promotion and local advertising. a. If the manufacturer’s list price is $470, what should Bernie pay for each bike if he orders 110 bikes at a time, assembles the bikes, and displays and advertises them? b. What is Bernie’s single equivalent discount rate? c. How much will Bernie pay the manufacturer for each bike if he orders ten bikes at a time and takes advantage of the other discounts?
In exercise 13, Bernie is given terms of 4/15 n/30, and he pays by day 15.
a. How much will he pay the manufacturer for the order of 110 bikes?
b. For how much will the manufacturer credit Bernie’s account?
c. If Bernie has a cash flow problem and waits until day 30 to pay the manufacturer, what is his effective rate of financing for the year?