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Difficulty: MediumTaxes and Tips

A family books a guided kayak tour that originally costs $250.00\$250.00. They apply a promotional code that gives them a 20%20\% discount. After the discount is applied, an 8%8\% local booking tax is added. What is the final amount the family pays for the tour?

  1. A
    $201.60\$201.60
  2. $216.00\$216.00Answer
  3. C
    $220.00\$220.00
  4. D
    $248.40\$248.40

Answer

$216.00\$216.00
The correct total is found by first reducing the original price by 20%20\% (a $50.00\$50.00 reduction, resulting in $200.00\$200.00). Then, an 8%8\% tax is calculated on this new balance ($200.00×0.08=$16.00\$200.00 \times 0.08 = \$16.00). Adding the tax to the discounted price yields $216.00\$216.00.

Step-by-Step Solution

1
Calculate the monetary value of the discount.
20%20\% of $250.00=0.20×250=$50.00\$250.00 = 0.20 \times 250 = \$50.00
The discount amount must be determined before calculating the new adjusted price.
2
Subtract the discount from the original price.
$250.00−$50.00=$200.00\$250.00 - \$50.00 = \$200.00
This finds the discounted subtotal, which is the amount subject to taxation.
3
Calculate the tax amount on the discounted price.
8%8\% of $200.00=0.08×200=$16.00\$200.00 = 0.08 \times 200 = \$16.00
Taxes are applied to the final selling price after discounts.
4
Add the tax to the discounted price to find the final total.
$200.00+$16.00=$216.00\$200.00 + \$16.00 = \$216.00
The customer pays the discounted price plus the applicable booking tax.

Key Concept

Calculating sequential percentages in financial transactions (discounts followed by taxes).
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Topics

Taxes and Tips

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