A city council plans to increase local sales taxes on goods from 5%

Question

EMPOWERgmat PS Series:
Block 1, Question 3

A city council plans to increase local sales taxes on goods from 5% to 8%. Once the plan is enacted, the total price with the 8% sales tax on a specific set of goods will be $1,944. What was the price of these goods with the original 5% sales tax?

A. $1,750
B. $1,800
C. $1,844
D. $1,890
E. $1,924

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Shef08 · Accepted Answer

Let’s assume the price of the product be 100, 
If tax is 8% the price becomes 108 and 105 when the tax is 5%,

Given:

108>> 1944
105>>?

So, 1944*105/108= 18*105 which comes to 1890.

Ans is D!

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mdbates93 · Answer

1944/1.08=1800
1800*1.05=1890

Answer Choice D

EMPOWERgmatRichC · Answer

OFFICIAL EXPLANATION

Hi All,

We're told that a city council plans to increase local sales taxes on goods from 5% to 8% and that once the plan is enacted, the total price with the 8% sales tax on a specific set of goods will be $1,944. We're asked for the price of these goods with the original 5% sales tax. Since this question gives us all of the 'numbers' involved, it's essentially just about doing a certain amount of Arithmetic. That having been said, in these types of questions, that math can often be done in a couple of different ways (meaning that some approaches are faster and easier than others) - and you can often use the answer choices to your advantage.

To start, It's interesting that the 8% increase would lead to EXACTLY $1,944.... without anything following the decimal point. This means that the original price of the goods (BEFORE taxes) is almost certainly a 'round number.' Looking at the answer choices, there's only one "nice, round number", so I'd be interested in seeing what an 8% increase of that number would be...

An 8% increase of 1800 --> 1800 + (.08)(1800) = 1800 + 144 = 1944. This is an EXACT MATCH for the $1,944 that we were given, so we now know the 'starting price' of the goods. Finding a 5% increase will be fairly straight-forward...

A 5% increase of 1800 --> 1800 + (.05)(1800) = 1800 + 90 = $1,890

Final Answer:  D

GMAT assassins aren't born, they're made, 
Rich

rahul5657 · Answer

With a 5% sales tax, the total price would be x+0.05x=1.05x.
With an 8% sales tax, the total price is given as $1944. that means => x+0.08x=1.08x => 1.08x = 1944 => x = 1800

so now, with a 5% sales tax, the total price would be =1.05x = 1.05*1800 = $1,890
Ans D.

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A city council plans to increase local sales taxes on goods from 5%

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