GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 18 Oct 2019, 11:50

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# A professional athlete was offered a three-year contract to play with

Author Message
TAGS:

### Hide Tags

Math Expert
Joined: 02 Sep 2009
Posts: 58453
A professional athlete was offered a three-year contract to play with  [#permalink]

### Show Tags

01 Feb 2018, 00:48
00:00

Difficulty:

(N/A)

Question Stats:

82% (03:03) correct 18% (02:04) wrong based on 28 sessions

### HideShow timer Statistics

A professional athlete was offered a three-year 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 three-year 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 three-year 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

_________________
Intern
Joined: 27 Aug 2016
Posts: 15
Re: A professional athlete was offered a three-year contract to play with  [#permalink]

### Show Tags

01 Feb 2018, 01:14

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

Intern
Joined: 03 Jun 2015
Posts: 21
GMAT 1: 710 Q49 V44
GPA: 3.58
WE: Information Technology (Computer Software)
Re: A professional athlete was offered a three-year contract to play with  [#permalink]

### Show Tags

01 Feb 2018, 02:20
Bunuel wrote:
A professional athlete was offered a three-year 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 three-year 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 three-year 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) = 496500-414000 = 825000

_________________
A dream doesn't become reality through magic; it takes sweat, determination and hard work.
VP
Joined: 09 Mar 2016
Posts: 1230
A professional athlete was offered a three-year contract to play with  [#permalink]

### Show Tags

Updated on: 01 Feb 2018, 10:47
Bunuel wrote:
A professional athlete was offered a three-year 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 three-year 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 three-year 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 three-year 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

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 ?

Originally posted by dave13 on 01 Feb 2018, 10:44.
Last edited by dave13 on 01 Feb 2018, 10:47, edited 1 time in total.
VP
Joined: 09 Mar 2016
Posts: 1230
Re: A professional athlete was offered a three-year contract to play with  [#permalink]

### Show Tags

01 Feb 2018, 10:46
dave13 wrote:
Bunuel wrote:
A professional athlete was offered a three-year 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 three-year 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 three-year 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

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 ?
Senior SC Moderator
Joined: 22 May 2016
Posts: 3554
A professional athlete was offered a three-year contract to play with  [#permalink]

### Show Tags

01 Feb 2018, 18:04
dave13 wrote:
dave13 wrote:
Bunuel wrote:
A professional athlete was offered a three-year 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 three-year 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 three-year 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

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. _________________ SC Butler has resumed! Get two SC questions to practice, whose links you can find by date, here. Instructions for living a life. Pay attention. Be astonished. Tell about it. -- Mary Oliver Target Test Prep Representative Status: Founder & CEO Affiliations: Target Test Prep Joined: 14 Oct 2015 Posts: 8104 Location: United States (CA) Re: A professional athlete was offered a three-year contract to play with [#permalink] ### Show Tags 02 Feb 2018, 12:19 Bunuel wrote: A professional athlete was offered a three-year 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 three-year 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 three-year 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.

_________________

# Scott Woodbury-Stewart

Founder and CEO

Scott@TargetTestPrep.com
122 Reviews

5-star rated online GMAT quant
self study course

See why Target Test Prep is the top rated GMAT quant course on GMAT Club. Read Our Reviews

If you find one of my posts helpful, please take a moment to click on the "Kudos" button.

Re: A professional athlete was offered a three-year contract to play with   [#permalink] 02 Feb 2018, 12:19
Display posts from previous: Sort by