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I am having difficulty solving the following problem

A toy store regularly sells all stocks at a discount price of 20% to 40%. If an additional 25% were deducted from the discount price what would be the lowest possible price of a toy costing $\$16$ before any discount (ans=$7.20).

How would I solve this problem and what does "If an additional 25% were deducted from the discount price" mean here?

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up vote 2 down vote accepted

The toy has a label price of $\$16$. Since we're going for the lowest price we apply the $40\%$ discount .

$$ \$16.00 \times (1 - 0.40) = \$16.00 \times 0.60 = \$9.60 $$

We then apply the addition $25\%$ discount to this intermediate price, $\$9.60$.

$$ \$9.60 \times (1 - 0.25) = \$9.60 \times 0.75 = \$7.20 $$

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a discount price of 20% means that a toy costing \$16 would now cost \$16*(1-0.20)=\$12.8. Similarly, a 40% discount would be \$16*(1-0.6) = \$9.60. So the lowest possible price with the %20-%40 discount would be \$9.60. This price is what they mean by the "discount price". If you deduct an additional 25 percent from this discount price of \$9.60, you would get \$9.60*(1-0.25)= \$7.20.

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