A wholesaler purchases a batch of goods for a total cost of $\text{₦}480,000$. He applies a markup of 25 % on cost to set the wholesale price. He then offers a trade discount of 10 % on the wholesale price to retailers and, if payment is made within 10 days, a cash discount of 2 % on the discounted price.
(a) If the entire batch is sold and the cash discount is taken, what is the wholesaler's actual profit percentage on the original cost?
(b) Assuming the markup and trade discount remain unchanged, what is the minimum cash‑discount rate (as a percentage) that would still allow the wholesaler to achieve at least a 20 % profit on cost?

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(a) 10.25 %; (b) Not achievable - even with 0 % cash discount the profit is only 12.5 %, so a 20 % profit cannot be attained.

Gce Model Questions Vol1 2020 Commerce Question 39

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