# Calculating Discounted Price

label Accounting
account_circle Unassigned
schedule 1 Day
account_balance_wallet \$5

What is the correct way to calculate discounted price?

I use original price x (1-percent off).   For 12% off of \$70 I use 70 x (1-.12)

Classmate is using 70/1.12

Who is right?

Apr 13th, 2015

If the question is: if a product has an original price of \$70, and there is a 12% discount on the product, what is the price of the product after the discount? then you are correct, you would take the original price of \$70 and multiply by (1-.12), or .88.

You would only divide by 1.12 if the question asked for the price before taxes. Ie: The final price of a product, including taxes, was \$70. What was the price before taxes were added? Then you would divide \$70 by 1.12 and get \$62.50. This is the same thing for markups, ie: if a product was marked up 12% and now costs \$70, what was the price of the product before the markup? You would do the same thing, \$70/1.12.

Apr 13th, 2015

Thanks for your response.  I don't understand concerning the tax rate.  How does that differ?

Apr 13th, 2015

I was just giving an example if you had to solve for a tax rate. If you make a purchase of \$100 and the tax rate is 10%, then you would pay \$110.00 total. If you were only given the \$110 after-tax amount and were told to determine the pre-tax amount at a tax rate of 10%, then you take \$110/(1.1) to get back to the original \$100. You are not doing this, you are given a price and calculating a discounted price based on a discount rate.

Apr 13th, 2015

...
Apr 13th, 2015
...
Apr 13th, 2015
Nov 23rd, 2017
check_circle