Question

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