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Question

Difficulty: MediumDiscounts and Sale Prices

An IT director is upgrading a company's data center and orders 4 new enterprise servers. The original retail price for each server is $4,500\$4,500. The hardware supplier offers a 20%20\% corporate discount on the total order. Additionally, because the company pays the invoice in full within 10 days, a 5%5\% early-payment discount is applied to the already reduced price. What is the final total price, in dollars, paid for the servers?

Answer: 13680 $

Answer

13680
The correct total is found by first determining the initial total order value ($18,000\$18,000), reducing it by the initial 20%20\% discount to find the new subtotal ($14,400\$14,400), and then reducing that subtotal by the additional 5%5\% discount to arrive at the final cost ($13,680\$13,680).

Step-by-Step Solution

1
Calculate the total original price of the 4 servers.
4×$4,500=$18,0004 \times \$4,500 = \$18,000
The discounts apply to the total order, so the total initial cost must be determined first.
2
Apply the 20% corporate discount to the total original price.
\$18,000 \times 0.20 = \$3,600 \text{ discount; } \$18,000 - \$3,600 = \$14,400
The first discount reduces the total cost before any other discounts are considered.
3
Apply the 5% early-payment discount to the new, reduced price.
\$14,400 \times 0.05 = \$720 \text{ discount; } \$14,400 - \$720 = \$13,680
Successive discounts are applied sequentially to the most recently calculated price, not the original price.

Key Concept

Calculating successive discounts on a total order amount.
Estimated Time:1m 30s
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Topics

Discounts and Sale Prices

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