Question

The city council has decided to add a 0.3% tax on motel and hotel rooms. If a traveler spends the night in a motel room that costs $55 before taxes, how much will the city receive in taxes from him?

• A. 10 cents
• B. 11 cents
• C. 15 cents
• D. 17 cents
• E. 21 cents

Hint:

Be very careful when converting percentages with decimals. A common mistake is to write 0.3% as 0.3. Always remember to divide by 100, so 0.3% becomes 0.003.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
This problem requires calculating a tax amount, which is a straightforward percentage calculation. Special attention is needed for the decimal in the percentage.
Step 2: Key Formula or Approach:
The formula for calculating the tax amount is: \[ \text{Tax Amount} = \text{Original Price} \times \text{Tax Rate} \] Step 3: Detailed Explanation:
Identify the values from the problem:
Original Price = $55
Tax Rate = 0.3%
First, convert the percentage to a decimal. Remember to divide by 100. \[ 0.3% = \frac{0.3}{100} = 0.003 \] Now, apply the formula: \[ \text{Tax Amount} = \$55 \times 0.003 = \$0.165 \] The question asks for the amount in cents. To convert dollars to cents, multiply by 100. \[ \$0.165 \times 100 = 16.5 \text{ cents} \] Since 16.5 cents is not an option and currency is typically rounded to the nearest cent, 16.5 cents rounds up to 17 cents.
Step 4: Final Answer:
The city will receive $0.165, which is 16.5 cents. The closest answer is 17 cents. The correct option is (D).