<h3>Answer:</h3>
$168,000
<h3>Explanation:</h3>
"7% for each CD sold" is the same as 7% of the sales total. The royalty payment to the recording artist is 7% of $2,500,000:
... royalty = 0.07 × $2,500,000 = $175,000
The recording artist must pay 4% of this amount to the agent, so the agent gets ...
... fee = 0.04 × $175,000 = $7,000
The artist's net earnings are the amount of the royalty less the fee that is paid to the agent:
... earnings = $175,000 -7,000 = $168,000
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<em>Shorter way</em>
The agent gets 4% of the artist's royalty, so the artist ends up with 96% of the royalty amount. That amount is 7% of CD sales, so the amount paid to the artist is ...
... 96%×7%×sales = 0.96×0.07×sales = 0.0672 × sales
For this problem, that amount is ...
... 0.0672 × 2,500,000 = 168,000
