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Simplified formula (GMAT PREP 1)

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Simplified formula (GMAT PREP 1)

by alex.gellatly » Fri Aug 03, 2012 11:11 pm
Before being simplified, the instructions for computing income tax in Country R were to add 2 percent of one's annual income to the average (mean) of 100 units of Country R's currency and 1 percent of one's annual income. Which of the following represents the simplified formula for computing the income tax, in Country R's currency, for a person in that country whose annual income is I?

50+(I/200)
50+(3I/100)
50+(I/40)
100+(I/50)
100+(3I/100)

Thanks!
A useful website I found that has every quant OG video explanation:

https://www.beatthegmat.com/useful-websi ... tml#475231
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by javzprobz » Sat Aug 04, 2012 2:31 am
Alex, thank you for posting these great questions today. Don't get me wrong, but this question plus a great explanation of answer of it can easily be found here: https://www.beatthegmat.com/mba/2010/10/ ... nt-problem

Look forward to your other great questions till....ummm...the end of my life, of course :D .
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by Anurag@Gurome » Sat Aug 04, 2012 3:40 am
alex.gellatly wrote:Before being simplified, the instructions for computing income tax in Country R were to add 2 percent of one's annual income to the average (mean) of 100 units of Country R's currency and 1 percent of one's annual income. Which of the following represents the simplified formula for computing the income tax, in Country R's currency, for a person in that country whose annual income is I?

50+(I/200)
50+(3I/100)
50+(I/40)
100+(I/50)
100+(3I/100)

Thanks!
Annual Income = I
2% of annual income = 2I/100 or 0.02I
Average of 100 units of country R's currency and 1% of one's annual income = (100 + 0.01I)/2
Therefore, income tax = 0.02I + (100 + 0.01I)/2 = (0.04I + 100 + 0.01I)/2 = (0.05I + 100)/2 = 50 + (0.05I/2) or 50 + I/40

The correct answer is C.
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by truplayer256 » Sat Aug 04, 2012 4:09 am
Average of 100 units and 1% of one's annual income = (0.01I + 100)/2 = I/200 + 50
Income tax = 0.02I + I/200 + 50 = 5I/200 + 50 = I/40 + 50
Choose C.
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