At a year end clearance, a car dealer reduces the list price of last years models by %12. if a certain model has a discounted price of 22,500, what was the list price? How much can be saved by purchasing last years model?

The list price is 25,568.18

The amount saved on the purchase (discount) is 3,068.18

Explanation:

The discount price can be calculated as follow

(1) list price x discount rate = discount in dollars

then:

list price - discount in dollars = discount price

or

(2) list price (1-discount rate) = discount price

we will use the second formula to solve for list price:

list (1 - 12%) = 22,500

22,500 / (1-12%) = list price

22,500/.88 = list price = 25,568.18

Now we calculate the discount using the first formula

25,568.18 x 12% = 3,068.18

And check if we reach the discount price:

25,568.18 - 3,068.18 = 22,500.00