kntombat wrote:
AndrewN, would love to hear your take on this question.
Hello,
kntombat. I have a lot on my plate today, so I will keep my analysis brief. I did choose (C), and I did so in about a minute and a half, perhaps because I just wrote a post in the Quant forum, and numbers were on my mind. Anyway, my take on the answer choices:
goodyear2013 wrote:
At Balpy Corporation, an employee's retirement plan is funded by taking a set percentage of the employee's wages and matching it with an equal amount, contributed by the corporation. Employees may choose to stop contributions at any time, or continue contributing until their employment is terminated. There is a $2,000 bonus, called an ORT bonus, for employees who stay at the corporation until retirement.
Which of the following is a conclusion that can be properly drawn from the statements above?
A) Employees of the Balpy Corporation who earn higher salaries will receive larger ORT bonuses for staying until retirement.
The passage clearly states that the ORT bonus is $2,000, not that that bonus is awarded on a sliding scale based on salary. This is an easy one to eliminate.
goodyear2013 wrote:
B) Employees of the Balpy Corporation who earn lower salaries will contribute a smaller percentage of their salaries to their retirement funds than will employees of the Balpy Corporation who earn higher salaries.
Since we are talking about percentages, we need to stick to percentages, not total amounts. The opening line of the passage tells us that
an employee's retirement plan is funded by taking a set percentage of the employee's wages. In other words, that percentage does
not change from employee to employee. Game over for this one.
goodyear2013 wrote:
C) Of the Balpy employees who stay until retirement, those who earn lower salaries will receive an ORT bonus that is a larger percentage of their annual salaries than that received by employees with higher salaries.
Now we are comparing the relative impact or significance of this $2,000 bonus. To someone who earned an annual salary of, say, $100,000, a $2,000 bonus represents just 2 percent of that salary; to someone who earned an annual salary of $30,000, a $2,000 bonus represents one-fifteenth, or 6 2/3 percent of that salary. 6 > 2, so we cannot argue against this one. Even if we used numbers such as $100,000 and $99,999, the balance would tilt in favor of the lower salary, by percentage.
goodyear2013 wrote:
D) Balpy employees who earn lower salaries will receive less money from their retirement plans than will Balpy employees who earn higher salaries.
This is a close second, in my book. But you have to be careful not to project real-life considerations onto a passage, and here, we are lacking any information on salaries, actual numbers for us to use to qualify anything. We also have no information on how long employees must work to draw a retirement. Maybe an executive can work for 5 years to qualify for retirement benefits, while a pen-pusher like me (or at least the office worker I used to be) has to stay for 30. We simply have no way of telling what sort of gross sum might be lying in store for those who retire. Finally, it is worth noting that the passage also says nothing about employees working beyond qualifying for retirement, so even if, in my hypothetical scenario, one worker had to work 5 years while another had to work 30, without further information, we could not say whether the latter worker might contribute for an extra 5-10 years. Ultimately, this answer choice fails under scrutiny.
goodyear2013 wrote:
E) The Balpy Corporation will benefit financially from hiring employees at high salaries and terminating their employment before the employees have worked for six months.
This is loosely connected to the passage at best. Perhaps keeping on an employee will lead to greater revenue for Balpy Corporation, so hiring and firing would be ill advised. Then, where does this arbitrary
six months come from? Based on the passage, why would we conclude anything about half a year when there are no time markers to lean on?
There you have it. The post ended up being a little longer than I had anticipated, but it was fun. Thank you for bringing the question to my attention, and, as always, good luck with your studies.
- Andrew