An item costs R1 150 including VAT at 15%. What is the price excluding VAT?

Answer and explanation

Correct answer: A. R1 000

  1. Step 1: Price including VAT is 115% of the price excluding VAT.
  2. Step 2: Price excluding VAT = 1 150 ÷ 1,15 = R1 000.
Answer
R1 000.
Why not the others: R977,50: 15% of the VAT-inclusive price was subtracted, but VAT is 15% of the price before VAT. R1 135: 15 was subtracted as rand. R172,50: this is not the price before VAT.

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