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A professional athlete was offered a threeyear contract to play with [#permalink]
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31 Jan 2018, 23:48
Question Stats:
77% (02:37) correct 23% (00:48) wrong based on 26 sessions
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A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing. Team L offered a threeyear contract providing for an annual salary of $150,000 in the first year, an increase in annual salary of 10% over the previous year for the next two years, and no signing bonus. If he accepts the offer of Team L and fulfills the threeyear contract terms, the athlete will receive how much more money by choosing Team L over Team if? (A) $32,500 (B) $50,000 (C) $82,500 (D) $92,000 (E) $100,000
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Re: A professional athlete was offered a threeyear contract to play with [#permalink]
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01 Feb 2018, 00:14
I go with Answer. C
Team K First Year: 100K + 50K Second Year: 120K Third Year: 144k
Total: 414K
Team L First Year: 150K Second Year: 165K Third Year: 181.5K
Total: 496.K
Difference: 82.5K
Hence Answer C.



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Re: A professional athlete was offered a threeyear contract to play with [#permalink]
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01 Feb 2018, 01:20
Bunuel wrote: A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing. Team L offered a threeyear contract providing for an annual salary of $150,000 in the first year, an increase in annual salary of 10% over the previous year for the next two years, and no signing bonus. If he accepts the offer of Team L and fulfills the threeyear contract terms, the athlete will receive how much more money by choosing Team L over Team if?
(A) $32,500
(B) $50,000
(C) $82,500
(D) $92,000
(E) $100,000 Renumeration offered by : Team K : 100,000 + 1.2*100,000 +1.2* 1.2*100,000 + 50,000 = 100,000(1+1.2+1.44+0.5)= 100,000*4.14 = 414,000 (1) Team L : 150,000 + 1.1*150,000 + 1.1*1.1*150,000 = 150,000(1+1.1+1.21) = 150,000*3.31= 496500 (2) Answer = (2)  (1) = 496500414000 = 825000 Answer is C.
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A professional athlete was offered a threeyear contract to play with [#permalink]
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01 Feb 2018, 09:44
Bunuel wrote: A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing. Team L offered a threeyear contract providing for an annual salary of $150,000 in the first year, an increase in annual salary of 10% over the previous year for the next two years, and no signing bonus. If he accepts the offer of Team L and fulfills the threeyear contract terms, the athlete will receive how much more money by choosing Team L over Team if?
(A) $32,500
(B) $50,000
(C) $82,500
(D) $92,000
(E) $100,000 Ok, GMAT quant party starts here A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing Hello! Yes, you ! please read below and correct my mistake! i am using formula , and exponent meant number of years x = \(100, 000 (1+0,20)^2\) x = 100,000*1.44 = 144,000 +bonus 50,000 = 194,000 x = \(150,000 (1+0,1)^2\) x = 150,000 * 1,21 x= 181,500 194,000  181,500 = 12,500 so why this formula doesnt work ?
Last edited by dave13 on 01 Feb 2018, 09:47, edited 1 time in total.



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Re: A professional athlete was offered a threeyear contract to play with [#permalink]
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01 Feb 2018, 09:46
dave13 wrote: Bunuel wrote: A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing. Team L offered a threeyear contract providing for an annual salary of $150,000 in the first year, an increase in annual salary of 10% over the previous year for the next two years, and no signing bonus. If he accepts the offer of Team L and fulfills the threeyear contract terms, the athlete will receive how much more money by choosing Team L over Team if?
(A) $32,500
(B) $50,000
(C) $82,500
(D) $92,000
(E) $100,000 Ok, GMAT quant party starts here Hello! Yes, you ! please read below and correct my mistake! i am using formula , and exponent meant number of years x = \(100, 000 (1+0,20)^2\) x = 100,000*1.44 = 144,000 +bonus 50,000 = 194,000 x = \(150,000 (1+0,1)^2\) x = 150,000 * 1,21 x= 181,500 194,000  181,500 = 12,500 so why this formula doesnt work ?



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A professional athlete was offered a threeyear contract to play with [#permalink]
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01 Feb 2018, 17:04
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dave13 wrote: dave13 wrote: Bunuel wrote: A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing. Team L offered a threeyear contract providing for an annual salary of $150,000 in the first year, an increase in annual salary of 10% over the previous year for the next two years, and no signing bonus. If he accepts the offer of Team L and fulfills the threeyear contract terms, the athlete will receive how much more money by choosing Team L over Team if?
(A) $32,500
(B) $50,000
(C) $82,500
(D) $92,000
(E) $100,000 Ok, GMAT quant party starts here Hello! Yes, you ! please read below and correct my mistake! i am using formula , and exponent meant number of years x = \(100, 000 (1+0,20)^2\) x = 100,000*1.44 = 144,000 +bonus 50,000 = 194,000 x = \(150,000 (1+0,1)^2\) x = 150,000 * 1,21 x= 181,500 194,000  181,500 = 12,500 so why this formula doesnt work ? Hi dave13 , Well, the formula didn't work because you calculated only his Year 3 salary (correctly, I might add). You have to add the money he makes in Year 1 and Year 2. Let's use Team K's deal. You calculated Year 3 correctly: $144,000 You have to add Year 1 = 100,000 Year 2 = 120,000 (= 100,000 * 1.2) Year 3 = 144,000 (=100,00*1.44 OR 120,000*1.2) Bonus = 50,000  TOTAL = $414,000 for Team K's deal Now do the same for Team L Year 1: Year 2: >(=150,000 * ____) Year 3: $181,500 (= 150,000 * 1.21) You've calculated a final amount FOR YEAR 3 based on accrued "interest" (really, just a percent increase) on initial salary  but compounding interest, while cumulative, is not "additive" in the sense it needs to be here. Hope that helps.
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Re: A professional athlete was offered a threeyear contract to play with [#permalink]
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02 Feb 2018, 11:19
Bunuel wrote: A professional athlete was offered a threeyear contract to play with Team K that provided for an annual salary of $100,000 in the first year, an increase in annual salary of 20% over the previous year for the next two years, and a bonus of $50,000 on signing. Team L offered a threeyear contract providing for an annual salary of $150,000 in the first year, an increase in annual salary of 10% over the previous year for the next two years, and no signing bonus. If he accepts the offer of Team L and fulfills the threeyear contract terms, the athlete will receive how much more money by choosing Team L over Team if?
(A) $32,500
(B) $50,000
(C) $82,500
(D) $92,000
(E) $100,000 Let’s first determine the contract for Team K. 100,000 + 1.2(100,000) + 1.2 x 1.2(100,000) + 50,000 150,000 + 120,000 + 144,000 = 414,000 Let’s now determine the contract for team L. 150,000 + 1.1(150,000) + 1.1 x 1.1(150,000) 150,000 + 165,000 + 181,500 = 496,500 Thus, the difference is 496,500  414,000 = 82,500. Answer: C
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Re: A professional athlete was offered a threeyear contract to play with
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