How to Calculate the Original Cost Before Tax is Added

Question:

If a store charges $174.96 per night, including an 8% sales tax, what is the original cost before tax is added?

Answer:

The original cost before tax is added is $162.00.

Calculating the original cost before tax is added involves reversing the process of including the sales tax in the final price. In this case, the store charges $174.96 per night, which includes an 8% sales tax. To determine the original cost before tax is added, we need to find the cost of the room without the tax.

Since the final cost of $174.96 includes the 8% sales tax, we can express this as 108% of the original cost. Let's denote the original cost as 'x'. Therefore, the equation to represent this situation is 1.08x = $174.96.

By solving the equation for x, we can find the original cost before tax is added. Dividing both sides by 1.08, we get x = $162.00. This means that the original cost before the 8% sales tax was added is $162.00.

Understanding how to calculate the original cost before tax is added is essential in various financial and business scenarios. By following similar steps and using algebraic equations, you can determine the initial cost of a product or service before any additional taxes or fees are included.