In a discount warehouse a hifi music centre is proced at £256. The customer is entitled to a 10% discount, but he must pay 17.5% VAT.
Does it make any difference whether the discount is subtracted before or after adding the VAT?
Compare the two methods of approach:
 First subtracting the discount, then adding the VAT.
 First adding the VAT, then subtracting the discount.
Suppose the discount is subtracted first:

Discount = 10% of £256 = 

× £256 = £25.60 
This means that the discount price is
£256  £25.60 = £230.40
Add the VAT

VAT = 17.5% of £230.40 = 

× £230.40 = £40.32 
The total price is therefore
£230.40 + £40.32 = £270.72
What happens if the VAT is added first?

VAT = 17.5% of £256 = 

× £256 = £44.80 
After adding the VAT the price is
£256 + £44.80 = £300.80
Subtract the discount

Discount = 10% of £300.80 = 

× £300.80 = £30.08 
The final price is therefore
£300.80  £30.08 = £270.72
Both give the same answer!