Kavitha goes to purchase a bike which is priced at Rs.35,640 including 10% sales tax. However the actual rate of sales tax at the time of purchase is 7%. Find the extra profit made by the shopkeeper if he still charges the original listed price.

Asked by Topperlearning User | 4th Jun, 2014, 01:23: PM

Expert Answer:

When sales tax is charged at 10%, for a basic price of Rs.100 the price including sales tax becomes:

Rs 100 + Rs 10 = Rs 110

 

Thus for Rs 110 price + sales tax, the basic price is Rs. 100.

 

Therefore,  for Rs 35640 price + sales tax, the basic price is

= 

 

For Rs. 100 basic price, the price plus 7% sales tax is Rs. 107

 

Therefore, for Rs. 32400 basic price, the price plus 7% sales tax is

=

 

Extra Profit made = Original list price - price with 7% sales tax

= Rs (35640 -  34668)  = Rs. 972

Answered by  | 4th Jun, 2014, 03:23: PM