Lydia bought a shirt at 20% off its retail price of $40. She paid 5% tax on the price after the discount. How much did Lydia pay for the shirt?

Step 1: Calculate the discount amount
To find the discount amount, we multiply the retail price by the discount percentage. The retail price is $40, and the discount percentage is 20%.

Discount amount = Retail Price × Discount Percentage
Discount amount = $40 × 20% = $40 × 0.20 = $8

Step 2: Subtract the discount amount from the retail price
Since Lydia received a discount, we need to subtract the discount amount from the retail price.

Price after discount = Retail Price - Discount Amount
Price after discount = $40 - $8 = $32

Step 3: Calculate the tax amount
To calculate the tax amount, we multiply the price after the discount by the tax percentage. The price after the discount is $32, and the tax percentage is 5%.

Tax amount = Price after discount × Tax Percentage
Tax amount = $32 × 5% = $32 × 0.05 = $1.60

Step 4: Add the tax amount to the price after the discount
To find out how much Lydia paid for the shirt, we need to add the tax amount to the price after the discount.

Total amount paid = Price after discount + Tax amount
Total amount paid = $32 + $1.60 = $33.60

Therefore, Lydia paid $33.60 for the shirt after applying the discount and paying the tax.