• NEW! FREE Beat The GMAT Quizzes
    NEW! FREE Beat The GMAT Quizzes
    NEW! FREE Beat The GMAT Quizzes
    Hundreds of Questions Highly Detailed Reporting Expert Explanations TAKE A FREE GMAT QUIZ
  • 7 CATs FREE!
    If you earn 100 Forum Points

    Engage in the Beat The GMAT forums to earn
    100 points for $49 worth of Veritas practice GMATs FREE

    Veritas Prep
    VERITAS PRACTICE GMAT EXAMS
    Earn 10 Points Per Post
    Earn 10 Points Per Thanks
    Earn 10 Points Per Upvote
    REDEEM NOW

If the amount of federal estate tax due on an estate valued

This topic has 3 expert replies and 0 member replies

If the amount of federal estate tax due on an estate valued

Post
If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?

A. 30%
B. 35%
C. 40%
D. 45%
E. 50%

I'm confused how to set up the formulas here. Can any experts help?

  • +1 Upvote Post
  • Quote
  • Flag

GMAT/MBA Expert

Post
ardz24 wrote:
If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?

A. 30%
B. 35%
C. 40%
D. 45%
E. 50%

I'm confused how to set up the formulas here. Can any experts help?
Hi ardz24.

Let's take a look at your question.

The value of the state is $1,350,000. Hence, it exceeds by $100,000 (because $1,350,000 - $1,250,000 = $100,000).

Now, the state has to pay $$437,000+100,000*43\%=437,000+100,000\cdot\frac{43}{100}=437,000+43,000=480,000.$$ Finally, the percentage is approximatily $$\frac{480,000}{1,350,000}\cdot100=\frac{480}{1,350}\cdot100\approx35.5\%.$$ This implies that the correct answer is the option B.

I hope it helps you.

I'm available if you'd like a follow-up.

Regards.

_________________
GMAT Prep From The Economist
We offer 70+ point score improvement money back guarantee.
Our average student improves 98 points.

  • +1 Upvote Post
  • Quote
  • Flag
Free 7-Day Test Prep with Economist GMAT Tutor - Receive free access to the top-rated GMAT prep course including a 1-on-1 strategy session, 2 full-length tests, and 5 ask-a-tutor messages. Get started now.

GMAT/MBA Expert

Post
ardz24 wrote:
If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?

A. 30%
B. 35%
C. 40%
D. 45%
E. 50%

I'm confused how to set up the formulas here. Can any experts help?
Hi ardz24.

Let's take a look at your question.

The value of the state is $1,350,000. Hence, it exceeds by $100,000 (because $1,350,000 - $1,250,000 = $100,000).

Now, the state has to pay $$437,000+100,000*43\%=437,000+100,000\cdot\frac{43}{100}=437,000+43,000=480,000.$$ Finally, the percentage is approximatily $$\frac{480,000}{1,350,000}\cdot100=\frac{480}{1,350}\cdot100\approx35.5\%.$$ This implies that the correct answer is the option B.

I hope it helps you.

I'm available if you'd like a follow-up.

Regards.

_________________
GMAT Prep From The Economist
We offer 70+ point score improvement money back guarantee.
Our average student improves 98 points.

  • +1 Upvote Post
  • Quote
  • Flag
Free 7-Day Test Prep with Economist GMAT Tutor - Receive free access to the top-rated GMAT prep course including a 1-on-1 strategy session, 2 full-length tests, and 5 ask-a-tutor messages. Get started now.
Post
ardz24 wrote:
If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?

A. 30%
B. 35%
C. 40%
D. 45%
E. 50%
The tax due is:

437,000 + 0.43(1,350,000 - 1,250,000)

437,000 + 0.43(100,000)

437,000 + 43,000 = 480,000

Thus, the tax due is:

480,000/1,350,000 = 48/135 ≈ 0.35, or 35 percent of the value of the estate.

Answer: B

_________________

Scott Woodbury-Stewart
Founder and CEO
scott@targettestprep.com



See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

  • +1 Upvote Post
  • Quote
  • Flag
  • The Princeton Review
    FREE GMAT Exam
    Know how you'd score today for $0

    Available with Beat the GMAT members only code

    MORE DETAILS
    The Princeton Review
  • PrepScholar GMAT
    5 Day FREE Trial
    Study Smarter, Not Harder

    Available with Beat the GMAT members only code

    MORE DETAILS
    PrepScholar GMAT
  • Varsity Tutors
    Award-winning private GMAT tutoring
    Register now and save up to $200

    Available with Beat the GMAT members only code

    MORE DETAILS
    Varsity Tutors
  • Magoosh
    Magoosh
    Study with Magoosh GMAT prep

    Available with Beat the GMAT members only code

    MORE DETAILS
    Magoosh
  • e-gmat Exclusive Offer
    Get 300+ Practice Questions
    25 Video lessons and 6 Webinars for FREE

    Available with Beat the GMAT members only code

    MORE DETAILS
    e-gmat Exclusive Offer
  • Target Test Prep
    5-Day Free Trial
    5-day free, full-access trial TTP Quant

    Available with Beat the GMAT members only code

    MORE DETAILS
    Target Test Prep
  • Economist Test Prep
    Free Trial & Practice Exam
    BEAT THE GMAT EXCLUSIVE

    Available with Beat the GMAT members only code

    MORE DETAILS
    Economist Test Prep
  • Veritas Prep
    Free Veritas GMAT Class
    Experience Lesson 1 Live Free

    Available with Beat the GMAT members only code

    MORE DETAILS
    Veritas Prep
  • Kaplan Test Prep
    Free Practice Test & Review
    How would you score if you took the GMAT

    Available with Beat the GMAT members only code

    MORE DETAILS
    Kaplan Test Prep
  • EMPOWERgmat Slider
    1 Hour Free
    BEAT THE GMAT EXCLUSIVE

    Available with Beat the GMAT members only code

    MORE DETAILS
    EMPOWERgmat Slider

Top First Responders*

1 Brent@GMATPrepNow 40 first replies
2 Ian Stewart 40 first replies
3 Scott@TargetTestPrep 39 first replies
4 Jay@ManhattanReview 28 first replies
5 GMATGuruNY 25 first replies
* Only counts replies to topics started in last 30 days
See More Top Beat The GMAT Members

Most Active Experts

1 image description Scott@TargetTestPrep

Target Test Prep

159 posts
2 image description Max@Math Revolution

Math Revolution

90 posts
3 image description Brent@GMATPrepNow

GMAT Prep Now Teacher

58 posts
4 image description Ian Stewart

GMATiX Teacher

49 posts
5 image description GMATGuruNY

The Princeton Review Teacher

38 posts
See More Top Beat The GMAT Experts