How to find cost before tax?
Understand the Problem
The question is asking for a method to determine the cost of an item or service before tax is applied. This involves understanding how sales tax is calculated and can be found by dividing the total price by 1 plus the tax rate.
Answer
Divide the total price by 1 plus the tax rate.
The price before tax is calculated by dividing the total price by 1 plus the tax rate.
Answer for screen readers
The price before tax is calculated by dividing the total price by 1 plus the tax rate.
More Information
This method is used to find the original price of an item before tax was added.
Tips
A common mistake is forgetting to convert the tax rate percentage to a decimal before using it in the formula. Another mistake is not adding 1 to the tax rate.
Sources
- How the Sales Tax Decalculator Works - corporatefinanceinstitute.com
- Reverse Sales Tax Calculator - calculatorsoup.com
- Reverse Sales Tax Calculator | Effortlessly Calculate Pre-Tax Amounts - hirequotient.com
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