Understanding Tax, Tips, Markups, Discounts, and Interest

Tax, Tips, Markups, Discount, & Interest

Sales Tax *additional amount of money charged on items that people buy Steps: Take the sales tax and change it to a decimal Multiply the decimal by the original price Add the product to the original price

EXAMPLE Drew wants to buy exercise equipment that costs $140. The sales tax is 5.75%. What is the total cost of the equipment? Take 5.75 and turn it into a decimal 5.75% = 0.0575 0.0575 x 140 = 8.05 Take the decimal & multiply it with the original price This is the amount of tax he will pay Take the tax and add it to the original price 8.05 + 140 = $148.05 So, Drew will pay $148.05 for the equipment.

Tips *small amount of money in return for a service Steps: Take the % and change it to a decimal Multiply the decimal with the original cost Add the product to the original cost

EXAMPLE A customer wants to tip 15% on a restaurant bill that is $35. What will be the total bill with tip? Take the % and change it to a decimal 15% = 0.15 Take the decimal and multiply it with the bill 0.15 x 35 = 5.25 This answer is the tip Add the tip to the total bill 5.25 + 35 = $40.25 So, the customer will pay a total of $40.25

EXAMPLE Julie s family goes out to eat. The restaurant automatically added an 18% gratuity to their bill since they are a party of 8. The total bill after the automatic 18% gratuity was $257.80. What was the price of the bill before the 18% gratuity? Let x = original bill So, 0.18x = gratuity x + 0.18x = $257.80 1.18x = 257.80 The price of the bill before gratuity was $218.47. x = 218.47

Markups *When a store sells an item for more than it paid for it Steps: Find the difference between the original and new price Set that up in the is spot and put the original amount in the of spot

EXAMPLE A store pays $56 for a GPS navigation system. They sell it for $89. What is the markup on the GPS as a percentage? 89-56 = 33 33 = x 56 100 56x = 3300 x = 58.9 The markup of the GPS is 59%.

Discount *amount by which the regular price of an item is reduced Steps: Take the % and change it to a decimal Take the decimal and multiply it with the original price Subtract the product from the regular price

EXAMPLE A DVD normally costs $22. This week it is on sale for 25% off. What is the new sales price of the DVD? Take the % and change it to a decimal 25% = 0.25 0.25 x 22 = 5.5 Take the decimal & multiply it with the original This is the discount Take the discount and subtract it from the price 22 5.5 = $16.50 So, the DVD now costs $16.50

Interest *money paid regularly at a particular rate for the use of money borrowed or for money being invested Steps: Use the formula I = PRT P = principal amount borrowed/invested R = interest rate (the %) T = time

EXAMPLE How much interest is earned in 5 years on $3,000 invested at an interest rate of 9% per year? I = PRT x = 3,000(9%)(5) x = 1,350