Stereo

[grandh01]

Diana bought a stereo for $530, which
was the retail price plus a 6 percent
sales tax. How much money could she
have saved if she had bought the
stereo at the same retail price in a
neighboring state where she would
have paid a sales tax of 5 percent?
(A) $1.00
(B) $2.65
(C) $4.30
(D) $5.00
(E) $5.30

OA IS D

[machichi]

This question is much easier than it seems. Remember they know you don't have a calculator, so they just want to test your thinking.

Let's pretend the stereo cost $500 pre-tax. Hmm, that would be .06*500, which equals 30. Hey, that's familiar! Ok, so she paid $30 in tax. What's .05*500? 25. Ok, so she would have saved $5. Easy as pie! D

Hmmmm, but how much was gas?

[everything's eventual]

Let the original retail price be x

Therefore, x + 0.06 x = 530

x = 500.

If there was a 5% sales tax, then final price would be 500 + 0.05 * 500 = 525

Hypothetical saving = 530 - 525 = USD 5.00

[Anurag@Gurome]

Diana bought a stereo for $530, which
was the retail price plus a 6 percent
sales tax. How much money could she
have saved if she had bought the
stereo at the same retail price in a
neighboring state where she would
have paid a sales tax of 5 percent?
(A) $1.00
(B) $2.65
(C) $4.30
(D) $5.00
(E) $5.30

OA IS D

Say the retail price is R%

Hence, price of the stereo = Retail price + 6% tax on the retail price = R + 6% of R = R + 0.06R = 1.06R

Now, 1.06R = 530 ---> R = 500

Price of the stereo in the neighboring state = 1.05R = $525

Hence, she could have saved $(530 - 525) = [spoiler]$5[/spoiler]

The correct answer is D.