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Calculating Tax

Many e-commerce businesses use PayPal to perform payment processing for them. For certain transactions, merchants are charged a fee of 2.4% of the selling price of the item plus $0.40. What would PayPal charge an online art store to collect payment on a painting selling for $400?

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Michael K. | QuickBooks Trainer & ConsultantQuickBooks Trainer & Consultant
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Obiviously, Keven meant to say:

Fee = 0.024(400) + 0.40

I just wanted to clearify it just in case.

 

Kevin S. |
5.0 5.0 (4 lesson ratings) (4)
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Since the variable quantity here is the selling price, let's let it equal x. Since Paypal takes 2.4% of the selling price ("of" implies multiplication,) and adds a constant $0.40 to the percentage, we start with 

Fee= 2.4%x + 0.40 = 0.24x + 0.40

Since x is the selling price, and the painting sold for $400, then 

Fee = 0.24(400) + 0.40

I'll leave the final calculation for the student