interesting math issue

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Guest

Hi all,

So here is a little brain teaser that I need to solve.

I need to calculate a tax amount based on a certain $ amount. However the
caveat is that the tax amount is a component of the $ amount. So, in my
example:-

Amount: $10,000
Formula for Tax Amount: Amount*0.0035

Howerver, Tax Amount needs to be included in Amount.

Can this be solved?
 
Hi all,

So here is a little brain teaser that I need to solve.

I need to calculate a tax amount based on a certain $ amount. However the
caveat is that the tax amount is a component of the $ amount. So, in my
example:-

Amount: $10,000
Formula for Tax Amount: Amount*0.0035

Howerver, Tax Amount needs to be included in Amount.

Can this be solved?
Click to expand...

So Amount = OrigAmount * (1 + 0.0035) ?

OrigAmount = Amount / (1.0035)
OrigAmount = $9965.12

That's assuming I understand your question.

Michael
 
(e-mail address removed) schreef:
Hi all,

So here is a little brain teaser that I need to solve.

I need to calculate a tax amount based on a certain $ amount. However the
caveat is that the tax amount is a component of the $ amount. So, in my
example:-

Amount: $10,000
Formula for Tax Amount: Amount*0.0035

Howerver, Tax Amount needs to be included in Amount.

Can this be solved?
Click to expand...

Basic math:
OrgAmount=Taxedamount/1.0035
 
So I guess to understand correctly, let us assume the following 3 variables:

FinalAmount: $10,000
Tax Amount: = 10,000*0.0035 = $35

But the tricky part the final amount always needs to be 10,000. So if we
back the amount down to (10000-35) = 9965, then that will now change the tax
amount.
 
So I guess to understand correctly, let us assume the following 3
variables:
FinalAmount: $10,000
Tax Amount: = 10,000*0.0035 = $35

But the tricky part the final amount always needs to be 10,000. So if
we back the amount down to (10000-35) = 9965, then that will now
change the tax amount.
Click to expand...

No,
final amount=initial amount+tax amount (eqn 1)

where
tax amount=initial amount*tax rate (eqn 2)

substituting (eqn 2) into (eqn 1) gives
final amount=initial amount+(initial amount*tax rate)

which is
final amount=initial amount*(1+tax rate) (eqn 3)

divide both sides of (eqn 3) by (1+tax amount) and re-arrange to give
initial amount=final amount/(1+tax amount)

Putting in the figures final amount=10,000 and tax rate=0.0035:
initial amount=10,000/(1+0.0035)
initial amount=9965.12

HTH

Andrew
 
(e-mail address removed) schreef:
So I guess to understand correctly, let us assume the following 3 variables:

FinalAmount: $10,000
Tax Amount: = 10,000*0.0035 = $35

But the tricky part the final amount always needs to be 10,000. So if we
back the amount down to (10000-35) = 9965, then that will now change the tax
amount.
Click to expand...

That is not correct. The final amount is 10000 which includes the 0.35
percent tax. You're making the mistake of calculating the tax over an
amount that already has the tax included. So to get the untaxed amount
you divide by 1.0035

10000/1.0035 = 9965.12 (approx)
So the taxamount = 34.88 (approx)

I say approx because there's some rounding in there.

The formula is a=b*(1+c)
therefore b = a/(1+c)
where
a=totaltaxedamount
b=untaxedamount
c=taxpercentage
 
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