If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?
A. 30%
B. 35%
C. 40%
D. 45%
E. 50%
I'm confused how to set up the formulas here. Can any experts help?
If the amount of federal estate tax due on an estate valued
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Hi ardz24.ardz24 wrote:If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?
A. 30%
B. 35%
C. 40%
D. 45%
E. 50%
I'm confused how to set up the formulas here. Can any experts help?
Let's take a look at your question.
The value of the state is $1,350,000. Hence, it exceeds by $100,000 (because $1,350,000 - $1,250,000 = $100,000).
Now, the state has to pay $$437,000+100,000*43\%=437,000+100,000\cdot\frac{43}{100}=437,000+43,000=480,000.$$ Finally, the percentage is approximatily $$\frac{480,000}{1,350,000}\cdot100=\frac{480}{1,350}\cdot100\approx35.5\%.$$ This implies that the correct answer is the option B.
I hope it helps you.
I'm available if you'd like a follow-up.
Regards.
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Hi ardz24.ardz24 wrote:If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?
A. 30%
B. 35%
C. 40%
D. 45%
E. 50%
I'm confused how to set up the formulas here. Can any experts help?
Let's take a look at your question.
The value of the state is $1,350,000. Hence, it exceeds by $100,000 (because $1,350,000 - $1,250,000 = $100,000).
Now, the state has to pay $$437,000+100,000*43\%=437,000+100,000\cdot\frac{43}{100}=437,000+43,000=480,000.$$ Finally, the percentage is approximatily $$\frac{480,000}{1,350,000}\cdot100=\frac{480}{1,350}\cdot100\approx35.5\%.$$ This implies that the correct answer is the option B.
I hope it helps you.
I'm available if you'd like a follow-up.
Regards.
GMAT Prep From The Economist
We offer 70+ point score improvement money back guarantee.
Our average student improves 98 points.
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Our average student improves 98 points.
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The tax due is:ardz24 wrote:If the amount of federal estate tax due on an estate valued at $ 1.35 million is $ 437,000 plus 43 percent of the value of the estate in excess of $ 1.25 million, then the federal tax due is approximately what percent of the value of the estate?
A. 30%
B. 35%
C. 40%
D. 45%
E. 50%
437,000 + 0.43(1,350,000 - 1,250,000)
437,000 + 0.43(100,000)
437,000 + 43,000 = 480,000
Thus, the tax due is:
480,000/1,350,000 = 48/135 ≈ 0.35, or 35 percent of the value of the estate.
Answer: B
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