1. **Problem statement:** A wholesaler buys a watch for 12000 excluding VAT and sells it to a retailer for 16950 including VAT. The VAT rate is 13%. We need to find how much the retailer pays for the watch excluding VAT. 2. **Formula and rules:** The price including VAT is given by $$\text{Price including VAT} = \text{Price excluding VAT} + \text{VAT} = \text{Price excluding VAT} \times (1 + \text{VAT rate})$$ 3. **Given:** - Price including VAT to retailer = 16950 - VAT rate = 13% = 0.13 4. **Find price excluding VAT for retailer:** Let the price excluding VAT be $x$. Using the formula: $$16950 = x \times (1 + 0.13) = x \times 1.13$$ 5. **Solve for $x$:** $$x = \frac{16950}{1.13}$$ 6. **Calculate:** $$x = 15000$$ 7. **Answer:** The retailer pays 15000 excluding VAT for the watch.