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Register now and save up to $200 Available with Beat the GMAT members only code • Free Practice Test & Review How would you score if you took the GMAT Available with Beat the GMAT members only code ## OG PS 11 tagged by: Brent@GMATPrepNow This topic has 7 expert replies and 1 member reply paml Junior | Next Rank: 30 Posts Joined 05 Feb 2015 Posted: 13 messages Upvotes: 1 #### OG PS 11 Sat Feb 07, 2015 12:43 pm OG 13th ed/2015 p. 153 Problem Solving Practice Question #11. When Leo imported a certain item, he paid a 7% import tax on the portion of the total value of the item in excess of$1000. If the amount of the import tax that Leo paid was $87.50 what was the total value of the item? A$1600
B $1850 C$2250
D $2400 E$2750

I don't quite understand this part of the question and how to set it up properly: "7% import tax on the portion of the total value of the item in excess of $1000". I'm not clear on what the italicized portion means. Is it saying he paid a 7% import tax on the$1000 portion of the item? The answer explanation sets it up as .07(t - 1000)

The way I set it up was .07x = 87.5
x=1250
Is this a wrong/bad way of setting it up?

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Matt@VeritasPrep GMAT Instructor
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Sun Feb 08, 2015 10:18 pm
Another approach here!

Suppose the item cost Leo $x. We know that the first$1000 is tax free, so Leo only pays 7% tax on the rest of the price, or $(x - 1000). We know that tax amounted to$87.50, so we have

87.50 = 7% of (x - 1000), or
87.5 = .07(x - 1000), or
87.5 = .07x - 70, or
157.5 = .07x, or
15750 = 7x, or
2250 = x

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Rich.C@EMPOWERgmat.com Elite Legendary Member
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Thu Feb 22, 2018 11:50 am
Hi All,

We're told that when Leo imported a certain item, he paid a 7% import tax on the portion of the total value of the item in EXCESS of $1000 and the amount of the import tax that Leo paid was$87.50. We're asked for the total value of the item. This question has a great 'round number shortcut' that you can take advantage of to avoid any heavy calculations.

With a 7% import tax, every $1000 increase in price ABOVE the initial value of the item will lead to a$70 increase in tax (since 7% of $1,000 =$70. Thus....

A $1,000 item =$0 in tax
A $2,000 item =$70 in tax
A $3,000 item =$140 in tax
Etc.

The total tax on the item is $87.50 - which is just a bit higher than$70, so the total price of the item will be a bit higher than $2,000. There's really only one answer that 'fits' here, but if you narrowed it down to Answers C and D and felt that you need to do a bit more work, then you can go in$500 increments (since 7% of $500 = HALF of$70 ---> $35).... A$1,500 item = $35 in tax A$2,000 item = $70 in tax A$2,500 item = $105 in tax$87.50 is closer to $70 than it is to$105, so the total price of the item would have to be closer the $2,000 than$2,500.

GMAT assassins aren't born, they're made,
Rich

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GMATGuruNY GMAT Instructor
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Sat Feb 07, 2015 12:53 pm
paml wrote:
When Leo imported a certain item, he paid a 7% import tax on the portion of the total value of the item in excess of $1000. If the amount of the import tax that Leo paid was$87.50 what was the total value of the item?
A $1600 B$1850
C $2250 D$2400
E $2750 We can PLUG IN THE ANSWERS, which represent the total value of the item. When the correct answer choice is plugged in, the tax will be$87.50.

Portion in excess of 1000 = 2400-1000 = 1400.
7% tax on this portion = (7/100)(1400) = 98.
Since the tax is too great, the correct answer choice must be smaller.
Eliminate D and E.

Portion in excess of 1000 = 1850-1000 = 850.
7% tax on this portion = (7/100)(850) ≈ 60.
Since the tax is too small, the correct answer choice must be greater.
Eliminate A and B.

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Brent@GMATPrepNow GMAT Instructor
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Sat Feb 07, 2015 12:59 pm
paml wrote:
I don't quite understand this part of the question and how to set it up properly: "7% import tax on the portion of the total value of the item in excess of $1000". I'm not clear on what the italicized portion means. In other words, the first$1000 is "free" (there's no tax).
So, for example, if the TOTAL value is $800, then there's no tax charged. Likewise, if the TOTAL value is$1000, then there's no tax charged.

However, if the TOTAL value were $1100, then Leo would pay 7% on$100 (since $1100 EXCEEDS$1000 by $100) If the TOTAL value were$1600, then Leo would pay 7% on $600 (since$1600 EXCEEDS $1000 by$600)

Cheers,
Brent

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Brent@GMATPrepNow GMAT Instructor
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Sat Feb 07, 2015 1:02 pm
paml wrote:
When Leo imported a certain item, he paid a 7% import tax on the portion of the total value of the item in excess of $1000. If the amount of the import tax that Leo paid was$87.50 what was the total value of the item?
A $1600 B$1850
C $2250 D$2400
E $2750 I don't quite understand this part of the question and how to set it up properly: "7% import tax on the portion of the total value of the item in excess of$1000". I'm not clear on what the italicized portion means.

Is it saying he paid a 7% import tax on the $1000 portion of the item? The answer explanation sets it up as .07(t - 1000) The way I set it up was .07x = 87.5 x=1250 Then I just added 1000 and got the answer C: 2250 Is this a wrong/bad way of setting it up ? Your solution is fine. It's pretty much the same as the official solution, except you're not showing all of the steps (i.e., you're making a few moves in your head) Cheers, Brent _________________ Brent Hanneson – Founder of GMATPrepNow.com Use our video course along with Check out the online reviews of our course Come see all of our free resources GMAT Prep Now's comprehensive video course can be used in conjunction with Beat The GMAT’s FREE 60-Day Study Guide and reach your target score in 2 months! ### GMAT/MBA Expert Brent@GMATPrepNow GMAT Instructor Joined 08 Dec 2008 Posted: 11408 messages Followed by: 1229 members Upvotes: 5254 GMAT Score: 770 Sat Feb 07, 2015 1:14 pm paml wrote: When Leo imported a certain item, he paid a 7% import tax on the portion of the total value of the item in excess of$1000. If the amount of the import tax that Leo paid was $87.50 what was the total value of the item? A$1600
B $1850 C$2250
D $2400 E$2750
Here's a step-by-step algebraic solution.

Let T = the TOTAL value of the item.

Leo paid a 7% import tax on the portion of the total value of the item in EXCESS of $1000 So, Leo pays tax on the amount that's GREATER then$1000
So, Leo pays 7% tax on (T - 1000)
We can write: import tax = 7% of (T - 1000)

The amount of the import tax that Leo paid was $87.50 So, we write:$87.50 = 7% of (T - 1000)
Or: $87.50 = 0.07(T - 1000) Expand to get: 87.50 = 0.07T - 70 Add 70 to both sides to get: 157.5 = 0.07T NOTE: At this point, you might just plug in the answer choices to see which one makes the above equation true. Or.... Divide both sides by 0.07 to get: 157.5/0.07 = T Solve: 2250 = T Answer: C Cheers, Brent _________________ Brent Hanneson – Founder of GMATPrepNow.com Use our video course along with Check out the online reviews of our course Come see all of our free resources GMAT Prep Now's comprehensive video course can be used in conjunction with Beat The GMAT’s FREE 60-Day Study Guide and reach your target score in 2 months! paml Junior | Next Rank: 30 Posts Joined 05 Feb 2015 Posted: 13 messages Upvotes: 1 Sat Feb 07, 2015 2:26 pm Thank you Brent & Mitch! ### GMAT/MBA Expert Scott@TargetTestPrep GMAT Instructor Joined 25 Apr 2015 Posted: 891 messages Followed by: 5 members Upvotes: 43 Thu Mar 15, 2018 9:27 am paml wrote: When Leo imported a certain item, he paid a 7% import tax on the portion of the total value of the item in excess of$1000. If the amount of the import tax that Leo paid was $87.50 what was the total value of the item? A$1600
B $1850 C$2250
D $2400 E$2750
We know that when Leo imports a certain item, he pays a 7% import tax on the portion of the total value in excess of $1,000. “In excess of” is the key phrase here, and it means that Leo does not pay any tax on his items until he hits$1,000. The best way to complete this problem is to set up an equation.

First, let’s say that T = total value of the item; therefore, (T - 1000) is the portion that is taxable.

Next, we can create an equation to determine T:

87.5 = 0.07(T - 1,000)

87.5 = 0.07T - 70

157.5 = 0.07T

157.5/0.07 = T

15,750/7 = T

T = 2,250

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