Question

You’re buying a new car the price msrp is $16,995 you’re trading your old car which is valued by the dealer at $5500 sales tax is 7% but it’s only paid on the difference between the price and trade in value what is the sales tax?

Answer 1

To calculate the sales tax on a new car purchase with a trade-in, subtract the trade-in value from the MSRP of the new car to find the taxable amount, then multiply that by the sales tax rate.

Step-by-step explanation:

To calculate the sales tax on a new car purchase with a trade-in, you should first find the difference between the car's MSRP and the trade-in value of the old car. Then, apply the sales tax rate to this difference to determine the amount of tax owed.

In this scenario, the MSRP of the new car is $16,995 and the trade-in value of the old car is $5,500. Subtracting the trade-in value from the MSRP gives us the taxable amount:

• $16,995 (MSRP of new car)
• -$5,500 (trade-in value of old car)
• $11,495 (difference, or taxable amount)

Next, calculate the sales tax by converting the percentage to a decimal and multiplying it by the taxable amount. With a sales tax rate of 7%, we convert it to 0.07:

• 0.07 (sales tax rate as a decimal)
• x $11,495 (taxable amount)
• $804.65 (sales tax to be paid, rounded to the nearest cent)

Therefore, the total sales tax on the car purchase after the trade-in is $804.65.