Worked Examples

Example 1: VAT Calculation

Problem: A computer costs £450 before VAT. VAT is charged at 20%. What is the total cost?

Solution:

Method 1 (Two steps): VAT = £450 × 20/100 = £90, Total = £450 + £90 = £540

Method 2 (Multiplier): Total = £450 × 1.2 = £540

Answer: £540

Example 2: Simple Interest

Problem: £2500 is invested at 4.5% simple interest per year. How much interest is earned in 3 years?

Solution:

Using I = PRT/100

I = (£2500 × 4.5 × 3) ÷ 100 = £33,750 ÷ 100 = £337.50

Answer: £337.50 interest earned

Example 3: Multi-step Discount

Problem: A £120 item has a 15% discount, then a further 10% student discount is applied to the reduced price. What's the final cost?

Solution:

After first discount: £120 × 0.85 = £102

After second discount: £102 × 0.9 = £91.80

Alternative: £120 × 0.85 × 0.9 = £91.80

Answer: £91.80

Example 4: Commission Calculation

Problem: A salesperson earns 6% commission on all sales. In one month, they sell £12,000 worth of products. What commission do they earn?

Solution:

Commission = £12,000 × 6/100 = £12,000 × 0.06 = £720

Answer: £720 commission