5% off $500 = $475. You save $25.
Equation: $500 − (5% × $500) = $500 − $25 = $475.
Another way to read it: you pay 95% of the original price — that's $475.
$475. The discount is $25 and the final price you pay is $475.
You pay $475 (before tax). That's $500 minus a $25 discount.