Question

If the sales tax in your city is 5.4% and an item costs $5 before tax, how much tax would you pay on that item? Round up to the nearest cent.

A) $0.27
B) $0.28
C) $0.29
D) $0.30

Answer 1

The correct answer is option a. To find the sales tax, you convert the percentage (5.4%) to a decimal (0.054) and multiply it by the item's price ($5). The tax comes out to $0.27, which does not require rounding up as it is already at the nearest cent.

Step-by-step explanation:

Calculating Sales Tax

To calculate the sales tax on an item, you need to convert the percentage rate to a decimal and then multiply it by the item's cost before tax. In this case, the sales tax rate is 5.4% which we convert to a decimal by dividing by 100, giving us 0.054. Now, we multiply the decimal rate by the item's price, $5.00:

$5.00 × 0.054 = $0.27

Since tax values are generally rounded to the nearest cent, and the calculated tax is exactly $0.27, there is no need to round up. Thus, you would pay $0.27 in sales tax for the item.

If the rules state that we must round up, despite the result being a precise cent value, then the sales tax would still be $0.27 as rounding up would not change the amount.