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## Last year, Company X paid out a total of $1,05,000... Last year, Company X paid out a total of$1,050,000 in salaries to its employees. If no employees earned a salary that is more than 20% greater than any other employee, what is the lowest possible salary that any one employee earned?

(A) $40,000 (B)$41,667
(C) $42,000 (D)$50,000
(E) $60,000 The OA is C. Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks. ### GMAT/MBA Expert GMAT Instructor Joined 04 Oct 2017 Posted: 551 messages Followed by: 11 members Upvotes: 180 swerve wrote: Last year, Company X paid out a total of$1,050,000 in salaries to its employees. If no employees earned a salary that is more than 20% greater than any other employee, what is the lowest possible salary that any one employee earned?

(A) $40,000 (B)$41,667
(C) $42,000 (D)$50,000
(E) $60,000 The OA is C. Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks. Hi swerve, Can you please recheck the question statement? It seems that there is some information missing or incomplete. _________________ GMAT Prep From The Economist We offer 70+ point score improvement money back guarantee. Our average student improves 98 points. 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. ### Top Member Legendary Member Joined 29 Oct 2017 Posted: 1018 messages Followed by: 4 members EconomistGMATTutor wrote: swerve wrote: Last year, Company X paid out a total of$1,050,000 in salaries to its employees. If no employees earned a salary that is more than 20% greater than any other employee, what is the lowest possible salary that any one employee earned?

(A) $40,000 (B)$41,667
(C) $42,000 (D)$50,000
(E) $60,000 The OA is C. Please, can any expert explain this PS question for me? I tried to solve it but I can't get the correct answer. I need your help. Thanks. Hi swerve, Can you please recheck the question statement? It seems that there is some information missing or incomplete. Oh sorry! Here's the complete question! Last year, Company X paid out a total of$1,050,000 in salaries to its 21 employees. If no employee earned a salary that is more than 20% greater than any other employee, what is the lowest possible salary that any one employee earned?

(A) $40,000 (B)$41,667
(C) $42,000 (D)$50,000
(E) $60,000 ### GMAT/MBA Expert GMAT Instructor Joined 25 May 2010 Posted: 15387 messages Followed by: 1872 members Upvotes: 13060 GMAT Score: 790 swerve wrote: Last year, Company X paid out a total of$1,050,000 in salaries to its 21 employees. If no employee earned a salary that is more than 20% greater than any other employee, what is the lowest possible salary that any one employee earned?

(A) $40,000 (B)$41,667
(C) $42,000 (D)$50,000
(E) $60,000 We can PLUG IN THE ANSWERS, which represent the smallest possible salary. To MINIMIZE the smallest salary, we must MAXIMIZE the other 20 salaries. Thus, each of the other 20 salaries must be the maximum allowed value: 20% greater than the smallest salary. Since the sum of the salaries is 1,050,000 -- a multiple of 1,000 -- the correct answer choice is almost certainly a multiple of 1,000. Eliminate B. When the correct answer is plugged in, the sum of all 21 salaries will be 1,050,000. Answer choice D: Smallest salary = 50,000. Maximum value of each of the other 20 salaries = 50,000 + 0.2(50,000) = 60,000. Sum of the 21 salaries = 50,000 + 20(60,000) = 50,000 + 1,200,000 = 1,250,000. The sum is too big. Eliminate D and E. A: Smallest salary = 40,000 Maximum value of each of the other 20 salaries = 40,000 + 0.2(40,000) = 48,000. Sum of the 21 salaries = 40,000 + 20(48,000) = 40,000 + 960,000 = 1,000,000. The sum is too small. Eliminate A. The correct answer is C. Algebraically: Let x = the smallest salary. As noted above, to MINIMIZE the smallest salary, we must MAXIMIZE the other 20 salaries. Thus, each of the other 20 salaries must be the maximum allowed value: 20% greater than the smallest salary = 1.2x. Sum the 20 greatest salaries = 20(1.2x) = 24x. Since the sum of all 21 salaries is equal to 1,050,000, we get: x + 24x = 1,050,000 25x = 1,050,000 x = 42,000. _________________ Mitch Hunt Private Tutor for the GMAT and GRE GMATGuruNY@gmail.com If you find one of my posts helpful, please take a moment to click on the "UPVOTE" icon. Available for tutoring in NYC and long-distance. For more information, please email me at GMATGuruNY@gmail.com. Student Review #1 Student Review #2 Student Review #3 Free GMAT Practice Test How can you improve your test score if you don't know your baseline score? Take a free online practice exam. Get started on achieving your dream score today! Sign up now. ### GMAT/MBA Expert GMAT Instructor Joined 25 Apr 2015 Posted: 2950 messages Followed by: 19 members Upvotes: 43 swerve wrote: Last year, Company X paid out a total of$1,050,000 in salaries to its employees. If no employees earned a salary that is more than 20% greater than any other employee, what is the lowest possible salary that any one employee earned?

(A) $40,000 (B)$41,667
(C) $42,000 (D)$50,000
(E) $60,000 Since the sum of all the salaries is a fixed amount (which is given to be$1,050,000), the lowest possible salary is obtained when all the salaries besides the lowest one are maximized. Since the greatest possible difference between any two salaries in this company is 20%, all the salaries besides the lowest salary should be 20% more than the lowest salary.

We can let the lowest salary = x and the greatest = 1.2x and create the following equation:

x + 20(1.2x) = 1,050,000

x + 24x = 1,050,000

25x = 1,050,000

x = 42,000

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

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