A retailer offers the following discount schemes for buyers on an item.
i) Two successive discounts of 20%.
ii) A discount of 25% followed by a discount of 15%.
iii) A discount of 40%.
Under which scheme(s) will the selling price be minimum?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. iii.
Scheme 1:
0.8 × 0.8 = 0.64 → 36% total discount
Scheme 2:
0.75 × 0.85 = 0.6375 → 36.25% total discount
Scheme 3:
Single 40% → 40% discount [Minimum SP]