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BTGmoderatorRO: Moderator; Posts: 772; Joined: Wed Aug 30, 2017 6:29 pm; Followed by:6 members

Problem Solving

by BTGmoderatorRO » Sat Feb 10, 2018 3:44 am

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If the personal income tax rate is lowered from 40% to 33%, what is the differential savings for a tax payer having an annual income before tax to the tune of $45000?

A. $3500
B. $5000
C. $3150
D. $7000
E. $10000

AO is C
what is the best method to solve this? I need an Expert view.

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Source: Beat The GMAT — Problem Solving | Sat Feb 10, 2018 3:44 am

GMATGuruNY: GMAT Instructor; Posts: 15539; Joined: Tue May 25, 2010 12:04 pm; Location: New York, NY; Thanked: 13060 times; Followed by:1906 members; GMAT Score:790

by GMATGuruNY » Sat Feb 10, 2018 4:06 am

Roland2rule wrote:If the personal income tax rate is lowered from 40% to 33%, what is the differential savings for a tax payer having an annual income before tax to the tune of $45000?

A. $3500
B. $5000
C. $3150
D. $7000
E. $10000

Since 40% - 33% = 7%, the taxpayer will save 7% of annual income:
(7/100)(45000) = 3150.

The correct answer is C.

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Scott@TargetTestPrep: GMAT Instructor; Posts: 8086; Joined: Sat Apr 25, 2015 10:56 am; Location: Los Angeles, CA; Thanked: 43 times; Followed by:29 members

by Scott@TargetTestPrep » Thu Jun 06, 2019 4:57 pm

BTGmoderatorRO wrote:If the personal income tax rate is lowered from 40% to 33%, what is the differential savings for a tax payer having an annual income before tax to the tune of $45000?

A. $3500
B. $5000
C. $3150
D. $7000
E. $10000

The savings for a taxpayer is:

0.4(45,000) - 0.33(45,000)

45,000(0.4 - 0.33)

45,000(0.07) = 3,150

Answer: C

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