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A person buys an item from a shop for which the shopkeeper offers a discount of 10% on the marked price. The person pays using an e-wallet which gives 10% cash back. Which one of the following is the value of effective discount?
Explanation
The effective discount is calculated by applying successive reductions to the marked price. First, a 10% discount is applied to the marked price (MP). If we assume the MP is 100, the price after the first discount is 90. Next, a 10% cashback is applied to the amount paid (90). Cashback functions similarly to a discount as it is money returned after the purchase. Calculating 10% of 90 gives a cashback of 9. Therefore, the final effective price paid by the person is 90 minus 9, which equals 81. The total reduction from the original marked price of 100 is 100 minus 81, resulting in a total discount of 19. This can also be verified using the successive discount formula: (x + y - xy/100), where x and y are 10, resulting in (10 + 10 - 100/100) = 19%.