The correct answer is number one ($20.40), although I would do it differently. Another way is by taking the $28.00 and multiplying by the 80% (0.80 when computed) to get the new price of the bag: 28 * .8 = $22.40. Then you have a $2 coupon, so you simply subtract from the new total: $22.40 - $2.00 = $20.40.
