Final Price Calculation: Discount and Tax

This explanation details the step-by-step process to determine the final price of a product when a discount is applied first, followed by a tax on the reduced price.

Discounted Price Calculation

The product's original price is given as INR 500.

A discount of 20% is applied to this original price.

First, we calculate the amount of the discount:

Discount Amount = Original Price \(\times\) Discount Rate

Discount Amount = INR \(500 \times 20\%\)

To calculate this, we convert the percentage to a decimal or fraction:

Discount Amount = INR \(500 \times \frac{20}{100}\) = INR $100$

Now, we find the price after applying the discount:

Price After Discount = Original Price - Discount Amount

Price After Discount = INR \(500 - 100\) = INR $400$

Tax Calculation on Discounted Price

Next, a tax of 5% is calculated based on the discounted price, which is INR 400.

We calculate the tax amount:

Tax Amount = Price After Discount \(\times\) Tax Rate

Tax Amount = INR \(400 \times 5\%\)

Converting the percentage to a fraction:

Tax Amount = INR \(400 \times \frac{5}{100}\) = INR $20$

Final Price Determination

The final price is determined by adding the calculated tax amount to the discounted price:

Final Price = Price After Discount + Tax Amount

Final Price = INR \(400 + 20\) = INR $420$

Calculation Summary Table

Thus, the final price of the product after applying the 20% discount and the subsequent 5% tax is INR 420.