Sunday, 21 December 2008

Dodgy Mathematics Special Edition, Part 2: For The Slow People At The Back

I said I would only explain this once, but some people clearly weren't listening, so I am going to have to say it again. But differently, because this time it's for the slow people.

VAT.

I saw a sign in Carter's on Saturday (I should explain that I was not in Carter's, but going past on the bus; I should also explain that yes, I was in Belfast city centre on the Saturday before Christmas, and that I left quite quickly) which said that they are offering VAT-free prices (or some such; I forget the exact phrasing), by reducing prices by 15%.

But of course this is incorrect, and I shall now explain why.

Suppose that pre-sale, an item cost £100 (this is at the new, lower, rate of VAT).

Now, if they reduce it by 15%, the new price will be:
(£100*85)/100 = £85

However, if they merely removed the 15% VAT, then the new price would be:
(£100*100)/115 = £86.96

which is not so good, so you wonder why they make that claim.

3 comments:

vanishing point said...

People don't understand percentages ... that's is clearly evidenced by peoples misunderstanding of house prices. Prices up by 50%, then down by 35% - "hey that's OK, prices are still 15% higher than at the start!!!"

Eh ... nil point! Your house is now worth less than at the start.

Maybe if people understood maths then we would have a stable economy!?!? (not bloody likely)

Virtual Methodist said...

Never mind percentages... when the lame-brains at the BBC couldn't work out that it was mathematically impossible for the voting public to save Tom from the dance off last week, that was final proof that as a nation we are innumerate... Although perhaps it demonstrates the truth of the widely held belief that the Beeb is dominated by Oxbridge classics scholars and polytechnic media studies graduates...

Alan Sloman said...

It has been said that arts students are just failed science students...