adding in a fee based off of another percentage

[Cberg]

I have been trying to figure out how to do this for days and can't seem to wrap my head around the math. Here's what I am trying to do. I'm selling a product that has an option for better financing but it costs 5% of the total amount financed. what I have been doing is taking my total and adding in 5.25 percent to cover the total after adding the fee (example: product price $10,000. Price charged after fee $10,525) the issue that I am running in to is that this does not actually cover my full fee that I pay for this special financing because of tax. I can't figure out what to do because if I add in the tax first the fee is then increased before the tax and now the tax is more so I didn't actually get the full fee covered. I would just like to be able to offer this special finance option without it effecting my profit. I've tried several formulas in excel but I don't see a way to do it without a circular reference.

Any help on this would be greatly appreciated!

FYI Tax is 6%

 

[Cberg]

I would like to add that tax in my state is 6%.

 

[Ishuda]

I have been trying to figure out how to do this for days and can't seem to wrap my head around the math. Here's what I am trying to do. I'm selling a product that has an option for better financing but it costs 5% of the total amount financed. what I have been doing is taking my total and adding in 5.25 percent to cover the total after adding the fee (example: product price $10,000. Price charged after fee $10,525) the issue that I am running in to is that this does not actually cover my full fee that I pay for this special financing because of tax. I can't figure out what to do because if I add in the tax first the fee is then increased before the tax and now the tax is more so I didn't actually get the full fee covered. I would just like to be able to offer this special finance option without it effecting my profit. I've tried several formulas in excel but I don't see a way to do it without a circular reference.

Any help on this would be greatly appreciated!

FYI Tax is 6%

What ways have you tried? Please show us your work even if you feel that it is wrong so we may try to help you.

The exact charge to the customer depends on whether you have to pay tax on your fee or not.

 

[Cberg]

Your problem is quite confusing...

>I'm selling a product that has an option for better financing
>but it costs 5% of the total amount financed.

If product price = 10,000 then the customer pays you 10,500?
The 500 then becomes what? An expense to you?

>The issue that I am running in to is that this does not cover my full
>fee that I pay for this special financing because of 6% state tax.
>I can't figure out what to do because if I add in the tax first the fee
>is then increased before the tax and now the tax is more so I didn't
>actually get the full fee covered.
>I would just like to be able to offer this special finance option
>without it affecting my profit.

Is the problem that you're paying .06 * 10500 = 630 in state tax,
instead of .06 * 10000 = 600?

Can you supply a CLEAR example of what actually goes on?

Starting price is $10,000 the fee is 5% of of the total amount financed, I have been adding 5.25% so I have been going with $10,525 + 6% sales tax. Making my total $11,157.56. So now to use this special rate financing I have to pay 5% which is actually $557.88 on this amount. So if I know go back and add the $557.88 instead of the $525 that I originally did my tax again changes which in turn makes my tax go up again and makes my 5% fee higher.

 

[Cberg]

What ways have you tried? Please show us your work even if you feel that it is wrong so we may try to help you.

The exact charge to the customer depends on whether you have to pay tax on your fee or not.

I tried adding in the 5.25% being $525 to 5.25% of the 6%. I tried using excel to to auto calculate the difference. I tried running the math backwards to see what percentage I would come up with then apply that percentage to a different deal and it didn't work out

 

[Cberg]

Here's an exact deal
Total Selling Price $20,128.50
Total Upfront Sales Tax $1,207.71
Insurance (Not Taxed) 594

Total Amount Financed $21,930.21

5% Participation Fee $1,096.51

In this scenario I added in my 5.25% of my selling price of 19124.47 which means I only collected $1004.03 but then had to pay $1,096.51.

 

[Ishuda]

I have been trying to figure out how to do this for days and can't seem to wrap my head around the math. Here's what I am trying to do. I'm selling a product that has an option for better financing but it costs 5% of the total amount financed. what I have been doing is taking my total and adding in 5.25 percent to cover the total after adding the fee (example: product price $10,000. Price charged after fee $10,525) the issue that I am running in to is that this does not actually cover my full fee that I pay for this special financing because of tax. I can't figure out what to do because if I add in the tax first the fee is then increased before the tax and now the tax is more so I didn't actually get the full fee covered. I would just like to be able to offer this special finance option without it effecting my profit. I've tried several formulas in excel but I don't see a way to do it without a circular reference.

Any help on this would be greatly appreciated!

FYI Tax is 6%

Is this a proper example?

Cost of Product       1000.00
Financed               900.00
Cost of Finance (5%)    45.00   [=900*0.05]
Total before tax      1045.00
Tax (6%)                62.70  [FONT=courier new] [=1045*0.06][/FONT]
Total including tax   1107.70
Financed              -900.00
Due at signing         207.70

 

[Cberg]

Is this a proper example?

Cost of Product       1000.00
Financed               900.00
Cost of Finance (5%)    45.00   [=900*0.05]
Total before tax      1045.00
Tax (6%)                62.70  [FONT=courier new] [=1045*0.06][/FONT]
Total including tax   1107.70
Financed              -900.00
Due at signing         207.70

No

 

[stapel]

No

In which detail is it incorrect? Please be specific. Thank you!