Question

Lucy's Lunch and Latte has found that customers are put off by the local tourism tax of 9% that is added to their bill. If Lucy decides to cover the tax herself, rather than adding it to the customer's bill, what percent will the customer see in savings? Write your answer as a percent rounded to the nearest tenth. (Hint: the answer is not 9%.)

Answer 1

Customer will save 8.3%.

Explanation:

Let the amount of bill paid by the customers = $x

Local tourism tax = 9%

Total amount of bill including local taxes

= (x + 9% of x)

= x + 0.09x

= 1.09x

If Lucy decides to pay the tax portion of the bill = 0.09x

Then percentage saving by the customer =
`\frac{\text{Taxes on bill}}{\text{Bill amount including tax}}* 100`

=
`(0.09x)/(1.09x)* 100`

= 8.26%

≈ 8.3%

Therefore, customer will see 8.3% saving.