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Topic: Confusion on adding percentage of cost to that cost.
Replies: 7   Last Post: Jul 13, 2005 6:45 PM

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Rob Morewood

Posts: 171
Registered: 12/6/04
Re: Confusion on adding percentage of cost to that cost.
Posted: Jul 13, 2005 6:45 PM
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strommsarnac@gmail.com wrote about someone telling him that to
"add 28% to $10" he should do the following:

: First. 100-28 = 72
: Second. 100/72 = 1.38888889
: Third. 10*1.3889 = $13.89

This assures that the added amount ($0.89) is 28% OF THE FINAL TOTAL.

Of course most (all? - anyone have a counter example?) sales taxes
are computed (by law) as a percentage OF THE SALE PRICE, not as a
percentage of the grand total. (Most Canadian provinces have TWO
sales taxes, federal and provincial, and it is unconstitutional for
one level of government to tax the taxes of another level of government.
So sales tax as a percentage of the grand total would be unconstitutional
here.)

However, I do have an example where the calculation should be done as
above. Condominiums in BC must put a percentage of their TOTAL BUDGET
into a continguency fund. Normally, managers find the budget by
adding up all the expected operating expenses for the year (say $10).
Then they have to add an amount (say 28%) for the contingency fund.
If they just add 28% of $10 (makes $2.80) then the total budget is
$12.80 and the contingency fund gets only $2.80/$12.80*100%=22%
of the budget, violating the law! On the other hand, the managers
in the condominium I used to be part of always did it this way.
(Actually the legal requirement is only 10% so our condo always
put aside 9%. But the law has no teeth. Managers do not even have
to be licensed, yet.)

Robert, who is
|)|\/| || Burnaby South Secondary School
|\| |orewood@olc.ubc.ca || Beautiful British Columbia
Mathematics & Computer Science || (Canada)

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