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Re: A sales manager at an industrial company has an opportunity to switch [#permalink]
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Bunuel wrote:
A sales manager at an industrial company has an opportunity to switch to a new, higher-paying job in another state. If his current annual salary is $50,000 and his current state tax rate is 5%, how much income after state tax would he make at the new job?

(1) His new salary will be 10% higher than his old salary.
(2) His annual state taxes will total $2,200 in the new state at his new job.


Kudos for a correct solution.


MANHATTAN GMAT OFFICIAL SOLUTION:

You may reason that in order to answer this question, we need to know how much his new salary will be, and how much his taxes will increase by. This reasoning will lead you to conclude that the answer is C. And you'll be right.

Of course, you need to be very careful about using this tactic. Many problems on the GMAT are designed to hoodwink your algebraic reasoning—usually to make you think that you need to know every value precisely to answer the question.

For example, suppose the question in the previous problem were changed to “Will the manager make more money at the new job, after state taxes?” The correct answer in this case would be B. The problem explicitly states that the new job is higher-paying, so we only need to check to see whether the change in state tax might lead to a lower after-tax compensation. Statement (2) tells us indirectly that his new state taxes ($2,200) will be lower than his current state taxes (5% of $50,000 = ($2,500), so his after-state-tax compensation will definitely be higher in the new job. We do not need to find out how much higher his pre-tax salary would be to answer this question.

Because the GMAT frequently uses traps involving basic algebraic reasoning, you should only resort to using it if you are truly stuck.
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A sales manager at an industrial company has an opportunity to switch [#permalink]
kvazar wrote:
(1) His new salary will be 10% higher than his old salary.
No info on state tax. If it's 5%, then 50000 + 10% (*1,1) - 5% (*0,95) = 52,250
if it's 10%, then 50000 + 10% (*1,1) - 10%(*0,9) = 49,500.
Not sufficient.

(2) His annual state taxes will total $2,200 in the new state at his new job.
No info on his new salary. Not sufficient.

(1) & (2) Together
We have both, his new salary and the amount of state tax for the year, notice that unlike in question stem, we got this amount in absolute value and not in percentage of total income.

Answer


"If his current annual salary is $50,000 and his current state tax rate is 5%, how much income after state tax would he make at the new job"

--> In the question stem, how do we know that the annual salary of $50000 is after 5% tax or before 5% tax?
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A sales manager at an industrial company has an opportunity to switch [#permalink]
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