Gce Model Questions Vol1 2019 Commerce Question 20

A company receives an invoice for goods amounting to \(\text{₦}2{,}500{,}000\). The supplier grants a trade discount of \(3\%\) on the invoice amount and, if payment is made within \(10\) days, an early‑payment discount of \(2\%\) on the amount after the trade discount. Value‑added tax (VAT) of \(7.5\%\) is applied on the amount after the trade discount but before the early‑payment discount. The company pays within the discount period. (a) Calculate the net amount payable. (b) Determine the overall effective discount percentage on the original invoice amount (including the effect of VAT). (c) Assuming the normal payment term is \(30\) days, compute the effective annualised discount rate based on the discount obtained for paying \(20\) days early.