Question

Dawn lives in an area where the sales tax is 5%. She purchases an item for$100 and has a coupon for 5% off. Does she pay $100 once sales tax is included?Why or why not?

Answer 1

To know the answer to this question, first, we need to know what's 5% of $100, then we can apply a sales tax of 5%.

$100-0.05(100)=100-5=95$

This means the price of the item is $95 after coupon.

Now, including sales tax

$95+0.05(95)=95+4.75=99.75$

As you can observe, the price of the item including taxes is $99.75.

This means she still pays less than the original price.

Remember that sales taxes are applied after the discount.

Therefore, she doesn't pay $100 for the item, including the coupon and sales taxes.