Before being simplified, the instructions for computing

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BTGModeratorVI: Legendary Member; Posts: 1223; Joined: Sat Feb 15, 2020 2:23 pm; Followed by:1 members

Before being simplified, the instructions for computing

by BTGModeratorVI » Fri Jun 05, 2020 11:44 am

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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 (arithmetic 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?

A. 50 + I/200

B. 50 + 3I/100

C. 50 + I/40

D. 100 + I/50

E. 100 + 3I/100

Answer: C
Source: GMAT prep test

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Source: Beat The GMAT — Problem Solving | Fri Jun 05, 2020 11:44 am

GMAT/MBA Expert

Brent@GMATPrepNow: GMAT Instructor; Posts: 16207; Joined: Mon Dec 08, 2008 6:26 pm; Location: Vancouver, BC; Thanked: 5254 times; Followed by:1268 members; GMAT Score:770

Re: Before being simplified, the instructions for computing

by Brent@GMATPrepNow » Sun Jun 07, 2020 5:34 am

BTGModeratorVI wrote: ↑
Fri Jun 05, 2020 11:44 am
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 (arithmetic 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?

A. 50 + I/200

B. 50 + 3I/100

C. 50 + I/40

D. 100 + I/50

E. 100 + 3I/100

Answer: C
Source: GMAT prep test

2 percent of one’s annual income
If income = i, then 2% of income = (2/100)i = 0.02i

average of 100 units of country R’s currency and 1 percent of one’s annual income
1 percent of one’s annual income = (0.01)i
So, average of 100 units of country R’s currency and 1 percent of one’s annual income = (100 + 0.01i)/2 = 50 + 0.005i

So, TOTAL TAX = 0.02i + (50 + 0.005i)
= 0.025i + 50
= (25/1000)i + 50
= (1/40)i + 50
= i/40 + 50
= C

Cheers,
Brent

Brent Hanneson - Creator of GMATPrepNow.com

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GMAT/MBA Expert

Scott@TargetTestPrep: GMAT Instructor; Posts: 8083; Joined: Sat Apr 25, 2015 10:56 am; Location: Los Angeles, CA; Thanked: 43 times; Followed by:29 members

Re: Before being simplified, the instructions for computing

by Scott@TargetTestPrep » Thu Jun 11, 2020 1:02 pm

BTGModeratorVI wrote: ↑
Fri Jun 05, 2020 11:44 am
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 (arithmetic 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?

A. 50 + I/200

B. 50 + 3I/100

C. 50 + I/40

D. 100 + I/50

E. 100 + 3I/100

Answer: C

Solution:

We are given that the instructions for computing income tax in country R were to add 2 percent of one’s annual income to the average (arithmetic mean) of 100 units of country R’s currency and 1 percent of one’s annual income. We need to determine the formula for computing the tax for a person who earns “I” annual income.

The expression is as follows:

0.02I + (100 + 0.01I)/2

2I/100 + (100 + I/100)/2

2I/100 + 100/2 + I/200

2I/100 + 50+ I/200

50 + 4I/200 + I/200

50 + 5I/200

50 + I/40

Answer: C

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