Question

The after-tax cost of a certain item is $2,159. If the local tax rate is 1.6% and the state tax rate is 3.7%, find the sales tax of this item.

Round your answer to the nearest dollar (whole number).

Answer 1

Let, the pre tax cost be $X

Now, total tax rate = 1.6% + 3.7% = 5.3%

Therefore, tax = 5.3% of X = 0.053X

Therefore, after tax cost = X + 0.053X = 1.053X

i.e. 1.053X = $2,159

Therefore, X = $2,159 / 1.053

X = 2,050.33 rounded off to $2,050

Therefore, Sales Tax = After Tax Cost - Pre Tax Cost

= $2,159 - $2,050

= $109

Local Sales Tax = $2,050 x 1.6% = $32.80

State Sales Tax = $2,050 x 3.7% = $75.85

Therefore, Total Sales Tax (rounded off) = $109

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