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Guy s net income equals his gross income minus his

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Guy s net income equals his gross income minus his [#permalink]

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New post 30 Jan 2006, 18:34
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Guy’s net income equals his gross income minus his deductions. By what percent did
Guy’s net income change on January 1, 1989, when both his gross income and his
deductions increased?

(1) Guy’s gross income increased by 4 percent on January 1, 1989.
(2) Guy’s deductions increased by 15 percent on January 1, 1989.
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New post 30 Jan 2006, 19:02
E.

We don't know the actual figures of any of the variables.
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New post 30 Jan 2006, 21:44
Net = gross - deductions

1) gross income up up by 4%. insufficient as we have no idea how much deductions went up
2) deductions up by 15%. Same reason as above. Insufficient.

Using 1) and 2):

If original gross income = g, deductions = d, then net = g - d

gross up by 4% -> 1.04g
net up by 15 percent -> 1.15d

Net net = 1.04g - 1.15d

Change in income = 1.04g - 1.15d - g + d = 0.04g - 0.15d

% change = (0.04g - 0.15d)/(g-d)

Now with different values of g and d, we will get different % change.

If we're not told what values, we won't know the % change.

Ans E
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New post 30 Jan 2006, 21:57
Phew...

Me too arrived at 'E'. But OA given was C, I was wondersing what trick can be there? It's a simple question but OA made me think that it's "not that simple" :-D
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New post 30 Jan 2006, 22:11
vivek123 wrote:
Phew...

Me too arrived at 'E'. But OA given was C, I was wondersing what trick can be there? It's a simple question but OA made me think that it's "not that simple" :-D


While working it, I thought C but I haven't though deeper into it yet... I'll think some more about it... (I have neck strain and it's killing me :twisted: )

What's the source anyway?
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New post 30 Jan 2006, 23:18
ywilfred wrote:
vivek123 wrote:
Phew...

Me too arrived at 'E'. But OA given was C, I was wondersing what trick can be there? It's a simple question but OA made me think that it's "not that simple" :-D


While working it, I thought C but I haven't though deeper into it yet... I'll think some more about it... (I have neck strain and it's killing me :twisted: )

What's the source anyway?


Hey Wilfred, looks like you are over working, take rest.
But I really appreciate your hard work. Working & also contributing to GMAT club :)

BTW, the source is GMAT sets (old ETS papers) but I have seen some OAs are wrong, so can't say that this OA is 100% correct!

Anyways, thanks a lot!
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New post 31 Jan 2006, 10:32
wow, for once i did this exactly as ywilfred did !!!

But then I was disappointed to see that I didnt get the OA, lol .... i cant see what ive done wrong to end up with E though .... same expression that gives different numbers depending on the original income and deductions .. :?:
  [#permalink] 31 Jan 2006, 10:32
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