A department store purchases logo shirts at a cost of $10 per shirt. They mark up the price 100% and put them on the sales floor. Every month that a shirt doesn’t sell, the store reduces the selling price by 25%. After three monthly markdowns, the final shirt from the shipment is sold. There is a 5% sales tax on the selling price. What is the total cost to the customer?

Accepted Solution

The final cost to the customer would be:

We can find this answer by taking each step individually.

The first step is to determine the cost after the 100% markup.
To get this, we would multiply the original cost by 2.
10*2 = 20.

Now that we have that new cost, we would find the cost after each markdown.
We would get this by taking the cost from the previous month and multiplying by 0.75 (75%), which is how much is left after each markdown of 25%.
First ---> 20*.75 = 15.
Second---> 15*.75 = 11.25.
Third ---> 11.25*.75 = 8.43.

Now that we have the cost of each shirt, we have to find the price along with sales tax.
Since the sales tax is 5%, we need to multiply by the whole cost 100% plus the addition 5% or (1.05).
8.43*1.05= 8.85.