In Bills, Best Buys, Profit and Loss you looked at money from the seller’s side. Now you will look at it from the shopper’s and the saver’s side: how much a discount saves you in a sale, how sales tax – in Trinidad and Tobago, Value Added Tax (VAT) at 12.5% – is added to a bill, and how simple interest makes savings grow or makes a loan cost more. Every one of these is a percentage calculation, so keep the methods from Percentages handy.

Discount

A discount is an amount taken off the marked price (the price on the tag). It is usually given as a percentage: “15% off”.

• Discount = discount % × marked price.
• Sale price = marked price − discount.
• Shortcut: with 15% off you pay 100% − 15% = 85% of the marked price.

Sales tax: VAT at 12.5%

VAT is a tax that the government collects on many goods and services. The standard rate in Trinidad and Tobago is 12.5% of the price before tax; some items, such as many basic foods, are zero-rated, so no VAT is added. Some price tags already include VAT and some do not, so read the tag or receipt carefully.

• VAT = 12.5% × price before VAT. Since 12.5% = 18, you can simply divide by 8.
• Price including VAT = price before VAT + VAT, or price before VAT × 1.125.
• When there is a discount and VAT, take off the discount first, then add VAT to the sale price.
• Working backwards: price before VAT = price including VAT ÷ 1.125.

Simple interest

When you save money in a bank or credit union, it pays you interest for the use of your money. When you borrow, you pay interest to the lender. The words to know are:

• Principal (P) – the amount saved or borrowed.
• Rate (R) – the percentage of the principal paid as interest each year (“per annum”).
• Time (T) – how long, in years. Change months to years: 6 months = 0.5 years, 9 months = 0.75 years.
• Interest (I) – the extra money. Amount (A) – principal + interest.

With simple interest, the interest is the same every year because it is always worked out on the original principal. Look at $1000 saved at 5% per year:

Years	1	2	3	T
Interest	$50	$100	$150	1000 × 5 × T ÷ 100

The pattern gives the simple interest formula: I = P × R × T100, and A = P + I.

Worked examples

Example 1: School shoes in a sale

Question: School shoes are marked $380, with 15% off. How much is the discount, and what is the sale price?

1. Discount = 15% of $380 = 0.15 × 380 = $57.
2. Sale price = $380 − $57 = $323. (Check: 85% of $380 = $323.)

Answer: Discount $57; sale price $323.

Example 2: Adding VAT

Question: A standing fan costs $640 before VAT. Find the VAT at 12.5% and the price including VAT.

1. VAT = 12.5% of $640 = 640 ÷ 8 = $80.
2. Price with VAT = $640 + $80 = $720.

Answer: VAT $80; total $720.

Example 3: Discount, then VAT

Question: A television is marked $3200 before VAT. In a sale there is 20% off, and then VAT at 12.5% is added. What does the customer pay?

1. Sale price = 80% of $3200 = $2560.
2. VAT = 12.5% of $2560 = 2560 ÷ 8 = $320.
3. Total = $2560 + $320.

Answer: $2880.

Example 4: Percentage discount

Question: A pair of jeans was $250 and is now $200. What is the percentage discount?

1. Discount = $250 − $200 = $50.
2. As a percentage of the original price: 50250 × 100% = 20%.

Answer: 20% off.

Example 5: Price before VAT

Question: A receipt shows $360 including VAT at 12.5%. What was the price before VAT, and how much was the VAT?

1. $360 is 112.5% of the price before VAT.
2. Price before VAT = 360 ÷ 1.125 = $320.
3. VAT = $360 − $320 = $40.

Answer: $320 before VAT; VAT $40.

Example 6: Saving at a credit union

Question: Anika saves $2500 at 4% per year simple interest for 3 years. Find the interest and the amount.

1. I = 2500 × 4 × 3100 = $300.
2. A = $2500 + $300.

Answer: Interest $300; amount $2800.

Example 7: A loan

Question: Mr Ali borrows $6000 at 8% per year simple interest for 212 years. Find the interest, the total he repays, and the monthly payment if he repays it in 30 equal instalments.

1. I = 6000 × 8 × 2.5100 = $1200.
2. Total = $6000 + $1200 = $7200.
3. Monthly: $7200 ÷ 30 = $240.

Answer: Interest $1200; total $7200; $240 a month.

Example 8: Finding the rate or the time

Question:
(a) $800 earns $96 simple interest in 3 years. Find the rate.
(b) How long does $1500 take to earn $270 at 6% per year?

1. (a) Rearrange: R = 100 × IP × T = 100 × 96800 × 3 = 4.
2. (b) T = 100 × IP × R = 100 × 2701500 × 6 = 3.

Answer:
(a) 4% per year
(b) 3 years.

Common mistakes

• Charging VAT on the marked price when there is a discount. VAT is worked out on the sale price, after the discount.
• Leaving time in months in the interest formula. 9 months is 0.75 years, not 9.
• Giving the interest when the question asks for the amount (or the other way round).
• Finding the original price by adding the percentage back to a sale price. $255 after 15% off came from $255 ÷ 0.85 = $300.

Practice questions

Try these yourself first, then open each answer to check your working.

Quick check

This is the last lesson in the Form 1, Term 3 set – and in Form 1. Back to the series index: NCSE Mathematics – Free Lessons for Forms 1–3

Curriculum link: This post is relevant to the Trinidad and Tobago National Lower Secondary (NCSE) Mathematics Curriculum – Form 1, Term 3, Strand 1.1 Number Operations and Number Theory, Topic 1.1.6 Consumer Arithmetic – Learning Outcomes 1.1.6.3 (percentage problems – here sales tax and discount) and 1.1.6.4 (solving problems involving simple interest).

Updates

2026/10/25

– Put each lettered part of the questions and answers on its own line.

© 2026 Vedesh Kungebeharry. All rights reserved.