Hi, Please help me to solve this question.. The wording of this question is making me confused..
Source- Previous GMAT question
When Leo imported a certain item, he made a 7 percent import tax o n the portion of the
total value of the item in excess of $1,000. If the amount of the import tax that Leo paid
was $87.50, what was the total value of the item?
A. $1,600
B. $1,850
C. $2,250
D. $2,400
E. $2,750
The answer given is C. 2,250$
Need help in solving Tax Problem
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- sanalnnair
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The question should replace the words "made a 7 percent import tax" to "paid a 7 percent import tax"
Let the value of the imported item = x
x-1000 is then the value on which he paid tax, which was 7%
(7/100)(x-1000) = 87.50
Solve to get x =2,250
Let the value of the imported item = x
x-1000 is then the value on which he paid tax, which was 7%
(7/100)(x-1000) = 87.50
Solve to get x =2,250
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sanalnnair wrote:Hi, Please help me to solve this question.. The wording of this question is making me confused..
Source- Previous GMAT question
When Leo imported a certain item, he made a 7 percent import tax o n the portion of the
total value of the item in excess of $1,000. If the amount of the import tax that Leo paid
was $87.50, what was the total value of the item?
A. $1,600
B. $1,850
C. $2,250
D. $2,400
E. $2,750
The answer given is [spoiler]C. 2,250$[/spoiler]
If $x is the total value of the item, then the 7 percent import tax will be levied on $(x - 1000) only, that way
0.07 × $(x - 1000) = $87.50
or x - 1000 = 8750/7 = 1250
or x = [spoiler]$2250
C[/spoiler]
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So the price of the item minus $1000 times 7% is 87.50 or if we put that in math language:
(p-1000)(7/100)=82.50
= (p-1000)(7)=8250
= 7p - 7000 = 8250
= 7p= 15250
= p = 2250.
(p-1000)(7/100)=82.50
= (p-1000)(7)=8250
= 7p - 7000 = 8250
= 7p= 15250
= p = 2250.
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Solution:sanalnnair wrote:Hi, Please help me to solve this question.. The wording of this question is making me confused..
Source- Previous GMAT question
When Leo imported a certain item, he made a 7 percent import tax o n the portion of the
total value of the item in excess of $1,000. If the amount of the import tax that Leo paid
was $87.50, what was the total value of the item?
A. $1,600
B. $1,850
C. $2,250
D. $2,400
E. $2,750
The answer given is C. 2,250$
Although this problem seems challenging it is actually a simple word translation.
We know that when Leo imports a certain item he pays a 7% import tax on the portion of the total value IN EXCESS OF $1,000. "In excess of" is the key phrase here, and it means that Leo does not pay any tax on his items until he hits $1,000. The best way to complete this problem is to set up an equation.
First, let's say that T = total value of the item, and, therefore, (T - 1000) is the portion that is taxable.
Next, we can create an equation to determine T:
87.5 = 0.07(T - 1,000)
87.5 = 0.07T - 70
157.5 = 0.07T
157.5/0.07 = T
15,750/7 = T
T = 2,250
The answer is C
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