Suppose that the local sales tax rate is 7% and you purchase a car for $16,000.

Question

a. How much tax is paid?
b. What is the car's total cost?

Answer 1

To calculate the sales tax and the total cost of the car, you can follow these steps:

a. Calculate the tax paid: \[ \text{Sales Tax} = \text{Purchase Price} \times \text{Sales Tax Rate} \] Given:

• Purchase Price = $16,000
• Sales Tax Rate = 7% = 0.07

Now, plug in the values: \[ \text{Sales Tax} = 16,000 \times 0.07 = 1,120 \]

So, the tax paid is $1,120.

b. Calculate the total cost of the car: \[ \text{Total Cost} = \text{Purchase Price} + \text{Sales Tax} \] \[ \text{Total Cost} = 16,000 + 1,120 = 17,120 \]

Thus, the car's total cost is $17,120.