Question:
The value of a car including VAT is Rs 382500. If the basic price of the car be Rs 340000, find the rate of VAT on cars.
Solution:
Let the rate of VAT be x%. Then, we have:
$34000+x \%$ of $34000=382500$
$\Rightarrow\left(\frac{x}{100} \times 340000\right)=382500-340000$
$\Rightarrow 3400 x=42500$
$\Rightarrow x=\frac{42500}{3400}$
$=12.5$
∴ The rate of VAT is 12.5%.
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