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A house cost Ms. Jones C dollars in 1965. Three years later she sold

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A house cost Ms. Jones C dollars in 1965. Three years later she sold [#permalink]

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New post 22 Oct 2017, 06:23
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A house cost Ms. Jones C dollars in 1965. Three years later she sold the house for 25% more than she paid for it. She has to pay a tax of 50% of the gain. (The gain is the selling price minus the cost.) How much tax must Ms. Jones pay?

(A) C/24
(B) C/8
(C) C/4
(D) C/2
(E) 0.6C
[Reveal] Spoiler: OA

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New post 22 Oct 2017, 06:35
CP is C after 3 years SP is 5/4 of C. Profit is C/4. 50% of C/4 is C/8

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New post 22 Oct 2017, 07:08
The gain = 0,25C = C/4 => tax = 50% * C/4 = C/8

Hence the answer is C

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A house cost Ms. Jones C dollars in 1965. Three years later she sold [#permalink]

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New post 22 Oct 2017, 23:41
Bunuel wrote:
A house cost Ms. Jones C dollars in 1965. Three years later she sold the house for 25% more than she paid for it. She has to pay a tax of 50% of the gain. (The gain is the selling price minus the cost.) How much tax must Ms. Jones pay?

(A) C/24
(B) C/8
(C) C/4
(D) C/2
(E) 0.6C

Choosing values is quick here.

Ms. Jones paid C = $100 for the house

She sold it for 25 percent more than she paid for it. She sold it for:
$100 * 1.25 = $125

She pays 50 % tax on the gain.
The gain: $125 - 100 = $25 gain

The tax on the gain:
$25 * .50 = $12.50

With C = 100, find the choice that yields answer 12.50

Eliminate C, D, and E immediately:
(C) C/4
(D) C/2
(E) 0.6C
They're too large ($25, $50, and $60 respectively)

Answers A and B remain:

(A) C/24
100/24 is a lot less than 12.50. 100/25 = 4, so 100 divided by 24 will not be much greater than 4. Eliminate Answer A.

(B) C/8
100/8 = 12.50
That is a match

Answer B

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A house cost Ms. Jones C dollars in 1965. Three years later she sold   [#permalink] 22 Oct 2017, 23:41
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