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## A baseball player signs a new contract

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### A baseball player signs a new contract

by Bullzi » 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 Senior | Next Rank: 100 Posts Posts: 62 Joined: Thu May 28, 2015 1:13 am Thanked: 5 times by Bullzi » Wed Sep 20, 2017 7:43 am Hello, So, while this question looks simple, while attempting it, I couldn't somehow make out where I was going wrong. I started out with something like below, Assuming the initial salary as N, we have, 110N/100 + 500 = 120N/100 Somehow, this doesn't seem to make sense. Please help! Thanks Senior | Next Rank: 100 Posts Posts: 62 Joined: Thu May 28, 2015 1:13 am Thanked: 5 times by Bullzi » Wed Sep 20, 2017 7:51 am Bullzi wrote: 110N/100 + 500 = 120N/100 Oops, just realized, classic example of what nerves are capable of! So, the correct equation should be 110N/100 + 500 = 112N/100 Solving for N, we have N = 25000 So, 12% increase would be 28000. Ans - D Thanks GMAT Instructor Posts: 2630 Joined: Wed Sep 12, 2012 3:32 pm Location: East Bay all the way Thanked: 625 times Followed by:119 members GMAT Score:780 by [email protected] » Wed Sep 20, 2017 4:44 pm We could also say that 2% of his old salary = 500. From there .02s = 500 s = 25,000 His old salary is 25,000, and his new salary is 1.1s + 500, or 1.1*25,000 + 500, or 27,500 + 500, or 28,000 ### GMAT/MBA Expert GMAT Instructor Posts: 6904 Joined: Sat Apr 25, 2015 10:56 am Location: Los Angeles, CA Thanked: 43 times Followed by:29 members ### Re: A baseball player signs a new contract by [email protected] » Sun Feb 02, 2020 12:48 pm 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.