Chapter 5_part2_student

Chapter 5_part2_student

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Unformatted text preview: ORIGINAL PRICE) × (TAX RATE) Example: Find the Pennsylvania sales tax for building Total Price = (Original Price) + (Sales Tax) = (Original Price) + (Original Price) × (Tax rate) = (Original Price)(1 + Tax rate) Distributive property materials that cost $84.65. [Pennsylvania sales tax rate: 6%] Solution Sale Tax = (Original Price) × (Tax Rate) = 84.65(0.06) = 5.079 The sale tax is $5.08. To find the total price, add the sale tax to the original price, this means that the price (including tax) is $84.65 + $5.08 = $89.73 …Price (Including Tax)… TOTAL AMOUNT = (ORIGINAL PRICE)(1 + TAX RATE) Example: In New Jersey, a truck tire at Sears costs $159.98. What is the total cost of the tire (including tax) [New Jersey sales tax rate: 6%] Solution 8.2 Simple Interest “Interest” is money paid for the use of money. We receive interest when we let others use our money (when we deposit money in a saving account, for example). We pay interest when we use the money of others (for example, when we borrow from a bank). …Simple Interest Formula… INTEREST = PRESENT VALUE × RATE × TIME I = Prt Example: Suppose that you decide to save 20 BHT per day, but only for a year. At the end of year, you will have saved 7300 BHT. If you then put your money into a saving account paying 0.5% interest, how much interest will the bank pay you after one year? After three years? Solution The present value (P) is 7300, the rate (r) is 0.5% = 0.005, and the time (t, in years) is 1. Therefore, I = Prt = 7300(0.005)(1) = 36.5 Round money answers to the nearest cent. After one year, the interest is 36.5 BHT. For three years, I = 7300(0.005)(3) = 109.50 After three years, the interest is 109.50 BHT. When: I = Amount of Interest P = Present Value (or Principal) r = Annual Interest Rate t = Time (in...
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This note was uploaded on 01/25/2014 for the course MATH ma 116 taught by Professor - during the Fall '11 term at Montgomery.

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