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100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote ## Profit/loss ##### This topic has 1 member reply ## Profit/loss Q. Mr. A purchased a house for Rs 1000000 in 1995, he spent Rs 100000 for routine maintenance & upkeep of the house. 1n 1999 he sold the house for 25% of more then what he paid for it. He paid 5% of the proceeds as gain tax & he has to pay 50% of his net profit to the broker, what is his net income? Master | Next Rank: 500 Posts Joined 15 Oct 2009 Posted: 320 messages Upvotes: 27 Joy Shaha wrote: Q. Mr. A purchased a house for Rs 1000000 in 1995, he spent Rs 100000 for routine maintenance & upkeep of the house. 1n 1999 he sold the house for 25% of more then what he paid for it. He paid 5% of the proceeds as gain tax & he has to pay 50% of his net profit to the broker, what is his net income? Net Income = Money in - Money Out Money in = sale price = 1.25 * 1,000,000 = 1,250,000 Money out = purchase cost + maintenance + gain tax + broker commission purchase cost = 1,000,000 maintenance = 100,000 gain tax = .05 x 1,250,000 = 62,500 It's unclear what "net profit" means for which the broker gets his commission, but let's assume it's the difference between the sales price and the purchase cost, without regard to maintenance cost, so broker commission = .5 x (1,250,000 - 1,000,000) = 125,000 Total Money Out = 1,287,500 Therefore, Net Income = 1,250,000 -1,287,500 = -37,500 • 5-Day Free Trial 5-day free, full-access trial TTP Quant Available with Beat the GMAT members only code • 1 Hour Free BEAT THE GMAT EXCLUSIVE 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 • Award-winning private GMAT tutoring Register now and save up to$200

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