A baseball player signs a new contract

Bullzi wrote: ↑

Wed Sep 20, 2017 7:38 am

A baseball player signs a new contract that includes a guaranteed 10 percent increase in salary over his old contract, plus a performance bonus of up to $500. If he earns the maximum possible performance bonus, his new salary including bonus will be equivalent to a 12 percent increase over his old salary. Assuming he earns the full bonus, what will his total new salary be, in dollars?

(A) 24,500
(B) 25,000
(C) 27,500
(D) 28,000
(E) 28,500

OA - D

We see that the maximum bonus of $500 is equivalent to 12 - 2 = 2 percent of his old salary. Therefore, letting s = his old salary, we can create the equation:

0.02s = 500

s = 500/0.02 = 50,000/2 = 25,000

Since his new salary (including the maximum bonus) is 12 percent more than his old salary, his new salary is 25,000 x 1.12 = $28,000.

Answer: D