Find the original amount after applying a discount

You can probably all take 10% off a number, but can you find the original amount if that 10% is already discounted?

If a percentage has been subtracted from a number, you can’t just add the same percentage back on to find the original number, you will get a lower value

 

Take an easy example:

The original amount of an item was £100 It had a 10% discount applied so all you saw was that it cost £90 You were told the 10% discount had been applied

 

So how would you calculate the original price?

Many people try to add 10% back on to £90 But 10% of £90 is £9, not £10 and so they get the incorrect answer of £99 The right way of doing this is to divide by the percentage (in this case 90% or 0.9) £90 divided by 0.9 gives the correct answer of £100

 

A more common example of this type of error can be found with VAT:

Last year, when the government reduced VAT from 17.5% to 15%, many shops lost money because they deducted 2.5% from the total price of their goods

 

Can you work out why this was the wrong thing to do?

(HINT: the total amount shown on most price tags includes VAT already)

 

REMEMBER: think carefully when working with percentages – they are easy to get wrong!