Markup, Discount, Taxes, and Interest Applying Percent Markup, Discount, Taxes, and Interest

Our Objective? We will take the skills we have used in finding percent values and apply this to real-world problems

Vocabulary Taxes A percent of an item’s cost added to find the final price Interest A percent of an amount of money (principal) added to, or paid for, its use Markup An amount, based on a percent, added TO a value to INCREASE its price Discount An amount, based on a percent, deducted FROM a value to DECREASE its price % of price increase = markup Wholesale Retail

Sales Tax In Tennessee, we have a 9.25% sales tax. What would the final price be for an iPod case that costs $27.50? If you are ONLY looking for the final price, there is a one-step method: Price: $27.50 Tax rate: x .0925 Sales tax: $2.54 $27.50 (1.0925) = This gives you the tax amount. Final cost? $27.50 + 2.54 $30.04 This adds the price back into the problem.

What is the sales tax on a $1200 television? $1200(.0925) = sales tax $111.00 = sales tax So the $1200 television will cost $1311 at the checkout.

Your savings account earns 3% each year. How much interest will you earn on a principal of $2500 for one year? Simple interest formula: I = prt I = prt This means the interest you earn = principal($)rate(%)time(in years) Let’s see how much you would have in the bank if you let your interest become part of the principal for three years. I = 2500(.03)1 I = $75 Year 1 $2500 Interest $ 75.00 Balance $2575.00 Year 2 $2575 Interest (.03)2575 Balance Year 3 Interest $ 77.25 $2652.25 $ 2652.25 $ 79.57 $ 2731.82

This is an oversimplified application of mortgage interest……. Your home has a 4.5% interest rate on a mortgage of $175,000 for a 30-year period. How much total interest could you expect to pay on this home over the life of the loan? I = prt I = $175,000(.045)(30) I = $236,250 Ready ???? This is just the interest…….NOT the amount of the mortgage……. This is an oversimplified application of mortgage interest…….

What would you have to pay as a one-time payment if you paid the Your credit card has a balance of $2500. The issuing company charges you 18% annual interest. How much will you pay in interest over one year? I = prt Not in your notes… What would you have to pay as a one-time payment if you paid the entire balance off in 6 months? I = 2500(.18)1 I = $450.00 I = prt I = 2500(.18)(.5) $2500 + 225 = $2725.00 I = $225.00

What is 70% of 12? Retail price?? $12.00 + $8.40 = n = .70 ( 12 ) As a store-owner, you mark-up what you have to pay for an item so you can make a profit. You purchased some lap desks for computers at a cost of $12 each.. You will markup each lap desk by 70% to find your retail price. What is the retail price? What is 70% of 12? Retail price?? $12.00 + $8.40 = n = .70 ( 12 ) $ 20.40 n = $8.40

If you paid $125 for each DooBop, and you will sell each for $210, what is your percent of markup? (% of increase??) Increase = change original Increase = 85 $125 Increase = 68%

You have been looking at a computer that normally retails for $850.00 Today it is on sale for 20% off. Find both the discount and sale price. .20(850) = discount Price – discount = sale price $170 = discount $850 - $170 = $680

One-Step Method for Sale Price ONLY!!!!!!!! If you are NOT going to pay 20% of the retail price, you WILL pay 80% of the price. $850(.8) = $680

One step?? $49.50 (.12) = discount $49.50 (.88) = sale price Regular Price $49.50 12% off One step?? $49.50 (.12) = discount $49.50 (.88) = sale price $5.94= discount $43.56= sale price Sale Price???? $49.50 - $5.94 = $43.56

You paid $12.00 for a shirt that is normally priced at $22.50. What was the % of discount? (% of decrease) $10.50 = % change $22.50 Change = % decrease Original Discount ~ 47%

$2800 15% OFF .15(2800) = discount $420 = discount All Steps $2800 15% OFF .15(2800) = discount $420 = discount $2800(.85)= sale price $2800 - $420 = sale price $2380 = sale price $2380 = sale price $2380(1.0925) = price+tax $2380(.0925) = tax $2600.15 = price $220.15 = tax $220.15 + $2380 = price Fewer steps $2600.15 = price

Previous Applications Interest Taxes Percent of Change Discounts and Markups Today? Commission and tips

Working with Commission Commission is an amount paid based on a percent of sales. In your new position as sales manager, you will receive a salary of $500 per week and 15% of the sales that your department generates for your store. How much would you expect to receive if your department sold $25,000 worth of merchandise during the week. Pay = salary + .15 of sales Pay = 500 + .15(25,000) Pay = $500 + $3750 Pay = $4250

As a salesperson in an electronics store, you receive 12% of your sales for one month. You also get a monthly salary of $1000. How much would you have to create in sales to make $4500 for the month? 4500 = 1000 + .12(sales)

You were disappointed in the sales of your department this month You were disappointed in the sales of your department this month. The sales totaled $3500. This was just 65% of what you had expected. What sales amount had you expected this month? Round to the nearest dollar. Write an equation………. “This” was(is) 65% of expected 3500 = .65(expected sales) 3500 = .65n _____ _____ .65 .65 Now what? $5385.00 = n Real estate agents get a commission on homes they sell. The expected commission rate is 6%. If an agent sold a home for $200,000, what would their commission be?

Tips Tips are normally paid to those in the service industry as recognition for appreciation of a job well done!!! Don’t forget the tax!!! 9.25% Tips are normally based on the total of a bill. The Billings family ate at their favorite restaurant. The final bill came to $56.75. The service was really good, so Mr. Billings decided to leave an 18% tip. .0925(56.75) = tax What is 18% of 56.75? .0925(56.75) = $5.25 .18(56.75) = tip amount $10.22 = tip amount What will they pay for the dinner with the tip and tax included? Dinner $56.75 Tax 5.25 Tip + 10.22 $72.22

Bill Total: $75.00 20% of $75 = tip .2(75) = $15.00 You and four friends go out to dinner. You have decided to share the cost of the meal and the tip equally. The food and service were both good! Everyone agrees to leave a 20% tip!!!!! What will each of you have to pay for the meal and tip? Bill Total: $75.00 20% of $75 = tip .2(75) = $15.00 $90 ÷ 5 = $18.00 each $75 + $15.00 = total for all

Clean Clothes for You!!! $380 (.0925) = sales tax This washing machine regularly sells for $475.00. This Saturday it will be on sale for 20% off. What will the sale price be? What will the final cost be after you add a 9.25% sales tax? $380 (.0925) = sales tax $475. - discount = sale price $35.15 = sales tax .20(475) = discount $ 380.00 + 35.15 $ 415.15 = final price $95 = discount $475.00 95.00 $ 380.00 Sale Price Don’t forget me!!! $380(.12)= commission $45.60 = commission $475(.8)= price $380 = price

Did we apply percent concepts to solve real-world problems?