Question

After allowing 20% discount an article is sold for rs.672 levying 12% VAT, find its market price​

Answer 1

The Market Price of the product is RS. 750.

The Market Price is calculated by dividing the components associated to Discount, which is less than 1, and the Value Added Tax, which more than 1, to the Resulting Price.

$c_{M} = \frac{c_{R}}{\left(1-\frac{r_{D}}{100} \right)\cdot \left(1+\frac{r_{T}}{100} \right)}$ (1)

Where:

$c_{M}$ - Market price, in monetary units.

$c_{R}$ - Resulting price, in monetary units.

$r_{D}$ - Discount rate, in percentage.

$r_{T}$ - Tax rate, in percentage.

If we know that $c_{R} = 672$, $r_{D} = 20$ and $r_{T} = 12$, then the market price is:

$c_{M} = \frac{672}{\left(1-\frac{20}{100} \right)\cdot \left(1+\frac{12}{100} \right)}$

$c_{M} = 750$

The market price of the product is RS. 750.

Answer 2

The market price is Rs. 750 which was obtained by creating a mathematical relationship from the given parameters.

PERCENTAGE DISCOUNT = 20%

VAT LEVIED= 12%

PRICE SOLD = 672

Let the MARKET PRICE = m

Hence,

market price * (1 - discount) * (1 + VAT) = price sold

m * (1 - 20%) * (1 + 12%) = 672

m * (1 - 0.2) * (1 + 0.12) = 672

m * 0.8 * 1.12 = 672

0.896m = 672

m = 672 / 0.896

m = Rs. 750

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