In addition to the basic trade discount of 20%, an outboard engine manufacturer gives a boat dealer an additional discount of 12.5% for providing follow-up warranty service, and a 5% discount for co-operative advertising and boat-show promotions.
a. After the basic trade discount, what further price reduction (in dollars) does the 12.5% discount represent on an engine with a list price of $3000?
b. After the first two discounts, what price reduction does the 5% discount give on the $3000 engine?