Question

A watch was bought for ₹2700 including 8% VAT. Find its price before the VAT was added.

• A. ₹2600
• B. ₹2550
• C. ₹2500
• D. ₹2700

Answer 1

The correct option is C ₹2500

Cost of watch including VAT = ₹2700
Let the initial cost of the watch be ₹100
VAT = 8% of ₹100 = ₹8
Cost of watch including VAT = ₹100 + ₹8 = ₹108
If cost including VAT = ₹108, then its initial cost = ₹100
If cost including VAT = ₹ 1, then its initial cost = ₹ $\frac{100}{18}$

If cost including VAT = ₹2,700, then its initial cost = ₹ $\frac{100}{18}\times 2700=₹2500$

Hence,
Required cost = ₹2500