Shay settled on a price of $8,950 for a new car. The dealer had to
add 5% sales tax to this price, but allowed a $1,000 trade-in for
Shay's old car. Although not a universal practice, please add the
sales tax to the price of the new car first and then deduct the trade-
in value. If the dealer required a 22% down payment, calculate the
amount of the purchase price that Shay financed.
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Step 1: Calculate the sales tax on the price of the new car
The sales tax is 5% of the price of the new car, which is $8,950.
Sales tax = 5% of $8,950
Sales tax = (5/100) * $8,950
Sales tax = $447.50
Step 2: Add the sales tax to the price of the new car
Total price of the new car with sales tax = Price of new car + Sales tax
Total price of the new car with sales tax = $8,950 + $447.50
Total price of the new car with sales tax = $9,397.50
Step 3: Deduct the trade-in value
Final price of the new car after deducting trade-in value = Total price of new car with sales tax - Trade-in value
Final price of the new car after deducting trade-in value = $9,397.50 - $1,000
Final price of the new car after deducting trade-in value = $8,397.50
Step 4: Calculate the down payment
The down payment is 22% of the final price of the new car.
Down payment = 22% of $8,397.50
Down payment = (22/100) * $8,397.50
Down payment = $1,847.25
Step 5: Calculate the amount financed
The amount financed is the final price of the new car after deducting the down payment.
Amount financed = Final price of new car after deducting trade-in value - Down payment
Amount financed = $8,397.50 - $1,847.25
Amount financed = $6,550.25
The amount Shay financed for the new car is $6,550.25.
To calculate the amount of the purchase price that Shay financed, we will follow these steps:
Step 1: Calculate the sales tax:
Sales tax = 5% of the price of the new car
Sales tax = 5/100 * $8,950
Step 2: Add the sales tax to the price of the new car:
Total price of the new car including sales tax = $8,950 + sales tax
Step 3: Calculate the trade-in value:
Trade-in value = $1,000
Step 4: Subtract the trade-in value from the total price of the new car:
Price after deducting trade-in value = (Total price of new car including sales tax) - Trade-in value
Step 5: Calculate the down payment:
Down payment = 22% of (Price after deducting trade-in value)
Down payment = 22/100 * (Price after deducting trade-in value)
Step 6: Calculate the amount financed:
Amount financed = (Price after deducting trade-in value) - Down payment
By following these steps, you can calculate the amount of the purchase price that Shay financed.
$8950 + (8950 * .05) - 1000 = Price
Multiply price by (1 - .22) to get portion financed.
I hope this helps.