## PS Help...

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### PS Help...

by ramonsa » Wed Jun 03, 2009 2:31 pm
8. After paying a 10 percent tax on all income over $3,000, a person had a net income of$12,000. What was the income before taxes?
(A) $13,300 (B)$13,000
(C) $12,900 (D)$10,000
(E) $9,000 Thanks Master | Next Rank: 500 Posts Posts: 355 Joined: 19 Feb 2009 Thanked: 2 times Followed by:1 members by vineetbatra » Fri Jun 05, 2009 12:24 pm non taxable income is 3000 so 12000 - 3000 = 9000 is the income after taxation. tax rate is 10% so 9000 is 90% total taxable income is 9000*100/90 I.e 10000 total income is 10000+3000=13000 ### GMAT/MBA Expert GMAT Instructor Posts: 16084 Joined: 08 Dec 2008 Location: Vancouver, BC Thanked: 5254 times Followed by:1267 members GMAT Score:770 ### Re: PS Help... by [email protected] » Thu Apr 07, 2022 12:13 pm ramonsa wrote: Wed Jun 03, 2009 2:31 pm 8. After paying a 10 percent tax on all income over$3,000, a person had a net income of $12,000. What was the income before taxes? (A)$13,300
(B) $13,000 (C)$12,900
(D) $10,000 (E)$9,000

Thanks
Since the income before taxes must be GREATER THAN the income after the taxes are paid, we can automatically eliminate answer choices D and E, since they’re both less than the after-tax income of $12,000. I’ll now test answer choice B for two reasons: i) The calculations are much easier with$13,000 than they are with $13,300 and$12,900.
ii) Since B is the middle value, I know that if testing the pretax income of $13,000 results in an after-tax income that’s less than$12,000, then I can eliminate choices A and B, since we’d need the pre-tax income to be greater than $13,000. Conversely, if testing$13,000 results in an after-tax income that’s greater than $12,000, then I can eliminate choices B and C, since we’d need the pre-tax income to be less than$13,000.
Let’s test answer choice C - $13,000 The taxable income (the amount greater than$3000) = $13,000 -$3000 = $10,000 A 10% tax on$10,000 = $1,000, which means the after-tax income =$13,000 - $1000 =$12,000....Perfect!