Building permit fees for a commercial project total $12,500. If the jurisdiction charges a 3.5% convenience fee for online payments and a 2.8% fee for credit card processing, what is the total amount due when paying online with a credit card?
Correct Answer
B) $13,294.38
First add convenience fee: $12,500 × 1.035 = $12,937.50. Then add credit card fee: $12,937.50 × 1.028 = $13,294.38. Both fees compound on the total amount.
Why This Is the Correct Answer
Option C is correct because both fees must be calculated sequentially (compounding). The convenience fee is applied first to the base permit fee ($12,500 × 1.035 = $12,937.50), then the credit card processing fee is applied to the new total including the convenience fee ($12,937.50 × 1.028 = $13,294.38). This reflects how payment processors typically structure their fee calculations in real-world scenarios.
Why the Other Options Are Wrong
Option A: $13,287.50
This answer likely adds both percentages together (3.5% + 2.8% = 6.3%) and applies them simultaneously to the base amount, which is incorrect since fees compound sequentially.
Option C: $13,350.00
This answer appears to use rounded numbers or incorrect percentages, resulting in an amount that doesn't match the proper sequential calculation of both fees.
Memory Technique
Think 'COMPOUND FEES' - like compound interest, each fee builds on the previous total. Use the acronym 'FIRST THEN' - apply the FIRST fee, THEN apply the second fee to the new amount.
Reference Hint
Florida Building Code Chapter 1 - Administration and Enforcement, specifically sections on permit fees and administrative costs
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