ACT Preparation / Unit 7 ACT 0631 worked example, 60 to 90 seconds
A Discount Then a Tax
The idea
When a price is discounted and then taxed, work in order, in three steps. First, find the sale price: subtract the discount from the original, or multiply the original by one minus the discount rate. Second, apply the tax to the sale price, not to the original: multiply by one plus the tax rate. Third, round only at the end, to the cent.
In practice
Worked example: an $80 pair of shoes is 25% off, and sales tax is 6%. Step one: 80 × 0.75 = $60. Step two: 60 × 1.06 = $63.60. The total is $63.60.
Where people slip
Tax applies to the price actually paid. The tax here is 6% of $60, which is $3.60; 6% of the $80 original would be $4.80, a tax on money never spent.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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