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Mr. Goldstein decides to buy a new car...

by BTGmoderatorLU » Fri Oct 27, 2017 6:17 am
Mr. Goldstein decides to buy a new car with a sticker price of $45,500. If the sales tax comes out to 5 percent of the purchase price, but Mr. Goldstein is able to negotiate a purchase price that is a 20 percent discount off the sticker price, how much sales tax does Mr. Goldstein pay?

a) $455
b) $910
c) $1560
d) $1820
e) $2275

The OA is D.

Please, can any expert assist me with above problem? I don't have it clear. Thanks.
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by DavidG@VeritasPrep » Fri Oct 27, 2017 7:06 am
LUANDATO wrote:Mr. Goldstein decides to buy a new car with a sticker price of $45,500. If the sales tax comes out to 5 percent of the purchase price, but Mr. Goldstein is able to negotiate a purchase price that is a 20 percent discount off the sticker price, how much sales tax does Mr. Goldstein pay?

a) $455
b) $910
c) $1560
d) $1820
e) $2275

The OA is D.

Please, can any expert assist me with above problem? I don't have it clear. Thanks.
10% of 45,500 = 4550.
20% of 45,500 = 4550*2 = 9100

So if we're getting a 20% discount, the new cost would be 45,500 - 9100 = 36,400.
This is taxed at 5%. 5% of 36,400 = 1820. (10% of 36,400 = 3640, so 5% is half of this value.) The answer is D
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by GMATGuruNY » Fri Oct 27, 2017 10:55 am
LUANDATO wrote:Mr. Goldstein decides to buy a new car with a sticker price of $45,500. If the sales tax comes out to 5 percent of the purchase price, but Mr. Goldstein is able to negotiate a purchase price that is a 20 percent discount off the sticker price, how much sales tax does Mr. Goldstein pay?

a) $455
b) $910
c) $1560
d) $1820
e) $2275
Alternate approach:
If a car with a sticker price of $100 is discounted by 20% to $80, the resulting sales tax = (5/100)(80) = $4.
Since (resulting sales tax)/(sticker price) = 4/100 = 4%, the resulting sales tax = 4% of the sticker price.
Thus:
Mr. Goldstein's tax = (4/100)(45,500) = (4)(455) = 1820.

The correct answer is D.
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by Scott@TargetTestPrep » Tue Nov 19, 2019 6:15 pm
BTGmoderatorLU wrote:Mr. Goldstein decides to buy a new car with a sticker price of $45,500. If the sales tax comes out to 5 percent of the purchase price, but Mr. Goldstein is able to negotiate a purchase price that is a 20 percent discount off the sticker price, how much sales tax does Mr. Goldstein pay?

a) $455
b) $910
c) $1560
d) $1820
e) $2275

The OA is D.

Please, can any expert assist me with above problem? I don't have it clear. Thanks.
We are given that Mr. Goldstein negotiates a purchase price that is 20% less than $45,500.

Thus, he pays:

0.8 x 45,500 = $36,400

Since tax is 5% of the purchase price, the amount of tax is:

36,400 x 0.05 = $1,820

Answer: D

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by [email protected] » Tue Nov 19, 2019 6:59 pm
Hi All,

The answer choices to this question are 'spread out' enough that you can do some estimation (without having to do every exact calculation).

The starting sticker price on a car is $45,500, which I'll 'round down' to $45,000.
The 20% discount off of THAT price would be: $45,000 - (.2)($45,000) = $45,000 - $9,000 = $36,000
The 5% tax on the $36,000 = (.05)($36,000) = $1800

Since I rounded down the initial car price, the correct answer would be a little more than $1800....

Final Answer: D

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