• NEW! FREE Beat The GMAT Quizzes
Hundreds of Questions Highly Detailed Reporting Expert Explanations
• 7 CATs FREE!
If you earn 100 Forum Points

Engage in the Beat The GMAT forums to earn
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 ## When Leo imported a certain item, he paid a 7 tagged by: VJesus12 ##### This topic has 4 expert replies and 0 member replies ## When Leo imported a certain item, he paid a 7 When Leo imported a certain item, he paid a 7 percent import tax on the portion of the total value of the item in excess of$1,000. If the amount of the import tax that Leo paid was $87.50, what was the total value of the item? (A)$1,600
(B) $1,850 (C)$2,250
(D) $2,400 (E)$2,750

I got confused because of the 7 percent. I'd appreciate some help here please.

### GMAT/MBA Expert

GMAT Instructor
Joined
08 Dec 2008
Posted:
13041 messages
Followed by:
1251 members
5254
GMAT Score:
770
Quote:
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

Cheers,
Brent

_________________
Brent Hanneson – Creator of GMATPrepNow.com
Use my video course along with

And check out all of these 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

GMAT Instructor
Joined
04 Oct 2017
Posted:
551 messages
Followed by:
11 members
180
Hi Vjesus12.

You have to be careful here. The statement says that Leo paid a 7% import tax on the portion of the total value of the item in excess of $1000. Let's suppose that X is the total value of the item. According to the statement above,$$X>1000$$ and we have to calculate 7% of the excess, i.e., 7%*(X-1000). Now, the amount that Leo paid was$87.50. So, we can set the equation $$7\%\cdot\left(X-1000\right)=87.50,$$ which is equivalent to $$X-1000=1250.$$ Now, we can conclude that $$X=2250.$$

So, the answer is option C.

_________________
GMAT Prep From The Economist
We offer 70+ point score improvement money back guarantee.
Our average student improves 98 points.

Free 7-Day Test Prep with Economist GMAT Tutor - Receive free access to the top-rated GMAT prep course including a 1-on-1 strategy session, 2 full-length tests, and 5 ask-a-tutor messages. Get started now.

### GMAT/MBA Expert

Elite Legendary Member
Joined
23 Jun 2013
Posted:
10197 messages
Followed by:
497 members
2867
GMAT Score:
800
Hi VJesus12,

Here, if the total value of the item were $2,000, then the tax would only apply to the amount over$1,000....
$1,000 x .07 =$70.
Since the tax is supposed to be $87.50, we know that the answer has to be GREATER than$2,000.

Let's TEST ANSWER D: $2,400.$1,400 x .07 = $98 This is TOO MUCH, so Answer D is too big. There's only one answer that makes sense... Final Answer: C GMAT assassins aren't born, they're made, Rich _________________ Contact Rich at Rich.C@empowergmat.com ### GMAT/MBA Expert GMAT Instructor Joined 09 Apr 2015 Posted: 1465 messages Followed by: 19 members Upvotes: 39 VJesus12 wrote: When Leo imported a certain item, he paid a 7 percent import tax on the portion of the total value of the item in excess of$1,000. If the amount of the import tax that Leo paid was $87.50, what was the total value of the item? (A)$1,600
(B) $1,850 (C)$2,250
(D) $2,400 (E)$2,750
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

_________________

Jeffrey Miller
jeff@targettestprep.com

See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

• 5-Day Free Trial
5-day free, full-access trial TTP Quant

Available with Beat the GMAT members only code

• Free Veritas GMAT Class
Experience Lesson 1 Live Free

Available with Beat the GMAT members only code

• 5 Day FREE Trial
Study Smarter, Not Harder

Available with Beat the GMAT members only code

• Get 300+ Practice Questions

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

• Free Trial & Practice Exam
BEAT THE GMAT EXCLUSIVE

Available with Beat the GMAT members only code

• Award-winning private GMAT tutoring
Register now and save up to $200 Available with Beat the GMAT members only code • FREE GMAT Exam Know how you'd score today for$0

Available with Beat the GMAT members only code

• Magoosh
Study with Magoosh GMAT prep

Available with Beat the GMAT members only code

### Top First Responders*

1 Ian Stewart 44 first replies
2 Brent@GMATPrepNow 33 first replies
3 Scott@TargetTestPrep 32 first replies
4 Jay@ManhattanReview 24 first replies
5 GMATGuruNY 18 first replies
* Only counts replies to topics started in last 30 days
See More Top Beat The GMAT Members

### Most Active Experts

1 Scott@TargetTestPrep

Target Test Prep

149 posts
2 Max@Math Revolution

Math Revolution

93 posts
3 Ian Stewart

GMATiX Teacher

53 posts
4 Brent@GMATPrepNow

GMAT Prep Now Teacher

50 posts
5 GMATGuruNY

The Princeton Review Teacher

30 posts
See More Top Beat The GMAT Experts