A bill of KSh 5,800 includes VAT at 16%. What was the price before VAT?
Answer and explanation
Correct answer: A. KSh 5,000
- Step 1: The inclusive price is 116% of the price before VAT. Step 2. Price before VAT = 5,800 x 100/116 = KSh 5,000. Answer: KSh 5,000. Why not the others: KSh 4,872: That takes 16% off the VAT-inclusive price, but VAT was added to the original price. KSh 5,784: That subtracts 16 shillings, not 16 percent. KSh 6,728: That adds 16% to the price that already includes VAT.
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