Totals Off by a Penny!

[DrByte]

Exactly. Looks correct to me too.
Since you're doing tax-included-pricing, when you give it 1.00000 it calculates the base pre-tax (20%) price to 0.8333. If you multiply it forward again, adding the 20% tax back onto it, it still works out correctly as 1.0000 (correctly rounded up from the 5-decimals 0.99996 to the 4-decimals 1.0000).

I echo kuroi's comment: Why do you think it's wrong?

[Design75]

Indeed nothing wrong with the calculation. 1/1.2=0.83333333

It is a common mistake a lot of people make when calculating their prices with and without taxes.

[swguy]

Tax Class: Taxable goods (20%)
Products Price (Net): 0.8333
Products Price (Gross): 1.00

Consider a product whole price is 1.00 with an embedded tax of 20%.

The tax component of this price is 1.00 - 1.0/(1+0.20) = 1 - 1/1.2 = 1 - 0.8333 = 0.1667.

Therefore, the net price is 1 - 0.1667 = 0.8333.

Remember the basic formula: VAT = $total - $total/(1+vat_percentage)

[BillyBoyle]

Cause 20% of 100 is 80 not 83.

[Design75]

Cause 20% of 100 is 80 not 83.

But in your case 100 is not 100% but 120%, so that causes 20% to be 83

[BillyBoyle]

OOPS timed out in editing > full reply below.

Cause 20% of 100 is 80 not 83.
But as I said if someone can explain it then I can understand it.
What has the number of decimal places got to do with it?
why is there a need to round down (to get the right answer)?
why not just a straight calculation?

I'm not a programer, but if I do the same calculation in excel and ask it to show 20 decimal places the answer is
£0.80000000000000000000.

I just want to understand what and how it's being caculated. Many cause I don't know and partly cause I want to reverse the calculation in Auto-facebook postings and show prices.

Anyway thanks for all the explanations: man Have I Got Some To Learn.

Thanks again guys.

[BillyBoyle]

Exactly. Looks correct to me too.
Since you're doing tax-included-pricing, when you give it 1.00000 it calculates the base pre-tax (20%) price to 0.8333. If you multiply it forward again, adding the 20% tax back onto it, it still works out correctly as 1.0000 (correctly rounded up from the 5-decimals 0.99996 to the 4-decimals 1.0000).

I echo kuroi's comment: Why do you think it's wrong?

There is a good reason you guys do the programming and we just spend a lot of time breaking it.

[DrByte]

Haha! I gather you're starting to see the logic in how it all works. Taxes are complicated ... especially when they're handled completely differently on the other side of the pond!

Cheers :)

[BillyBoyle]

Consider a product whole price is 1.00 with an embedded tax of 20%.

The tax component of this price is 1.00 - 1.0/(1+0.20) = 1 - 1/1.2 = 1 - 0.8333 = 0.1667.

Therefore, the net price is 1 - 0.1667 = 0.8333.

Remember the basic formula: VAT = $total - $total/(1+vat_percentage)

Thanks Scot, I appreciate the math leason and explanation from DrByte.

Seeing the formula written down makes it as clear as pea soup, but I do start to understand it now.

[kuroi]

Don't get hung up on the idea that they're taxes. Just think of them as percentages and be grateful for the one benefit of working with 20% and not 17.5%.

Taxes are added as a percentage to a net price. You were trying to calculate it from the gross price so starting in the wrong place.

To work backwards from a gross price is more complex, which is where swguy's formula comes in.