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# Federal law prohibits businesses from reimbursing any

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Manager
Joined: 15 Apr 2010
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29 Jun 2010, 10:32
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35% (medium)

Question Stats:

73% (01:59) correct 27% (02:13) wrong based on 1020 sessions

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Federal law prohibits businesses from reimbursing any employees for the cost of owning and operating a private aircraft that is used for business purposes. Thus, many American companies themselves purchase private aircraft. The vast majority of the business aviation fleet is owned by small and mid-size businesses, and flights are strictly for business purposes, with mostly mid-level employees on board. These companies and their boards of directors are in full compliance with the law and with what is best for their businesses.

Which of the following can be most properly inferred from the statements above?

A) The Federal law in question costs businesses money.
B) Most executives would rather fly on company owned planes than on commercial airlines.
C) Large businesses usually have their executives fly first or business class on commercial flights.
D) Upper level executives are less often in compliance with the law.
E) By not receiving any reimbursement for these flights, the mid-level executives on board are complying with the law.
Senior Manager
Joined: 25 Feb 2010
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29 Jun 2010, 10:55
1
Its between A & E.
rest all can be ignored.

A incorrect --> no evidence about relative costs.

E correct -- > the executives following the company's guidelines also are fully complying with the law.

It's clearly stated that mid level employees use flights owned by the business

Hope this helps ~~~
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Manager
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29 Jun 2010, 12:24
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A) The Federal law in question costs businesses money.
-- Though the federal law in question initially cost money to the business, eventually its beneficial for the business. They save money since they don't have to reimburse the money to their employees. Hence A is not a correct answer choice.

B) Most executives would rather fly on company owned planes than on commercial airlines.
-- New information. Hence B cannot be a correct answer choice.

C) Large businesses usually have their executives fly first or business class on commercial flights.
-- Nothing is mentioned about the large businesses. Hence C is a not a correct answer choice.

D) Upper level executives are less often in compliance with the law.
-- Nothing is mentioned about upper level executives. Hence D cannot be a correct answer choice.

E) By not receiving any reimbursement for these flights, the mid-level executives on board are complying with the law.
-- This is a correct answer choice. Since most mid-level executives travel in company's private jet, according to law they are not supposed to be reimbursed their money.
Thank You.

Thanks,
Akhil M.Parekh
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29 Jun 2010, 12:38
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I didn't like E. Why would an employee be reimbursed for a flight on a company-owned plane?

(I can see how it is the best choice in this case, however.)
Manager
Joined: 24 Dec 2009
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29 Jun 2010, 12:53
michigancat,

In GMAT we always have to assume the premise put forward by author is correct. Author has its own reasoning. Here the assumption is - employee is supposed to pay for his travels to the company if he is using company's private jet. Though in real world this might not make sense.

I hope I was able to clear your doubts atleast to some extent. Thank You.

Thanks,
Akhil M.Parekh
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30 Jun 2010, 08:27
amp0201 wrote:
michigancat,

In GMAT we always have to assume the premise put forward by author is correct. Author has its own reasoning. Here the assumption is - employee is supposed to pay for his travels to the company if he is using company's private jet. Though in real world this might not make sense.

I hope I was able to clear your doubts atleast to some extent. Thank You.

Thanks,
Akhil M.Parekh

But the laws just prohibit reimbursement of an employee's jet, not of the company's jet!
VP
Joined: 17 Feb 2010
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03 Jul 2010, 17:28
It is between A and E because B, C and D bring outside information.

Nothing is mentioned about costs in the argument.

Hence E.
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Joined: 06 Aug 2010
Posts: 170
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28 Sep 2010, 10:56
2
Tricky one. (E).

tingle15 wrote:
Federal law prohibits businesses from reimbursing any employees for the cost of owning and operating a private aircraft that is used for business purposes. Thus, many American companies themselves purchase private aircraft. The vast majority of the business aviation fleet is owned by small and mid-size businesses, and flights are strictly for business purposes, with mostly mid-level employees on board. These companies and their boards of directors are in full compliance with the law and with what is best for their businesses.

Which of the following can be most properly inferred from the statements above?

A) The Federal law in question costs businesses money. Nothing in the law forces the businesses to pay anything - in fact, all it does is PROHIBIT them from paying money.
B) Most executives would rather fly on company owned planes than on commercial airlines. No info is given on the preferences of executives.
C) Large businesses usually have their executives fly first or business class on commercial flights. The passage states that most private airplanes are owned by small/medium businesses, so this is trying to trick you into thinking that executives of large businesses must fly commercially (since their businesses don't buy private planes). But there's nothing that prevents those executives from owning their own planes - as long as they aren't reimbursed for them. Also, they could fly coach.
D) Upper level executives are less often in compliance with the law. Again trying to trick you - because most flights are made by mid-level executives, upper level executives must be getting reimbursed. Again wrong, for similar reasons to (C).
E) By not receiving any reimbursement for these flights, the mid-level executives on board are complying with the law. This one tries to trick you with its wording. The law prohibits reimbursements for the employees' own planes, not the business's planes - so at a glance, this might seem irrelevant. But that's the point. It doesn't matter whether they receive reimbursements for these flights, because the planes in question don't fall under the law. So reimbursements or not, the executives on board are complying with the law.
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20 Nov 2013, 19:09
1
This inference question combines two of the premises in the stimulus. The first is sentence one: "Federal law prohibits businesses from reimbursing any employees for the cost of owning and operating a private aircraft that is used for business purposes." The second is the last sentence: "These companies and their boards of directors are in full compliance with the law and with what is best for their businesses."

If these employees are in full compliance with the law, and law prohibits employees from being reimbursed, then these employees must not be being reimbursed. This is answer choice E.

I hope this helps!!!
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Senior Manager
Joined: 29 Oct 2008
Posts: 347
Location: United States
Concentration: Marketing, Technology

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30 Dec 2013, 16:36
tingle15 wrote:
Federal law prohibits businesses from reimbursing any employees for the cost of owning and operating a private aircraft that is used for business purposes. Thus, many American companies themselves purchase private aircraft. The vast majority of the business aviation fleet is owned by small and mid-size businesses, and flights are strictly for business purposes, with mostly mid-level employees on board. These companies and their boards of directors are in full compliance with the law and with what is best for their businesses.

Which of the following can be most properly inferred from the statements above?

A) The Federal law in question costs businesses money.
B) Most executives would rather fly on company owned planes than on commercial airlines.
C) Large businesses usually have their executives fly first or business class on commercial flights.
D) Upper level executives are less often in compliance with the law.
E) By not receiving any reimbursement for these flights, the mid-level executives on board are complying with the law.
I didn't select E because I thought though board of directors could be in full compliance of Law(Federal Law/State Law/Church Law/abcd Law etc etc)[as per last statement], it was never mentioned that mid-level employees on board are in compliance with every law. Is this line of thinking wrong to discard E that E didn't specify the law boundaries specifically for mid-level employees?

I selected A because it implicitly specified that the boundaries of Law(Federal in this case). The businesses will definitely be purchasing private aircrafts as per the second statement(highlighted above). How could this option be wrong?
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01 Jan 2014, 08:51
2
Due to Federal law companies tells its employee ---- If you use your own aircraft for business purpose you wont get reimbursement....probably because reimbursement will be higher than economy class ticket on commercial airline...

Instead, many American companies themselves purchase private aircraft. You can't be paid reimbursement for what you have'nt spent....

so i dont violate the law for receiving free ride and not receiving reimbursement...rightfully so as i don't have any bills to put my claim....

WHAT CAN BE INFERRED......
A) The Federal law in question costs businesses money. In a long run ...this arrangement may be cheaper....INCORRECT
B) Most executives would rather fly on company owned planes than on commercial airlines. ...WHO KNOW'S? INCORRECT
C) Large businesses usually have their executives fly first or business class on commercial flights. ...NOWHERE INFERRED... INCORRECT...
D) Upper level executives are less often in compliance with the law. ........NOWHERE INFERRED... INCORRECT...
E) By not receiving any reimbursement for these flights, the mid-level executives on board are complying with the law.... CORRECT....

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27 Jan 2017, 23:23
According to the statements, the companies that own private aircraft for business use are fully in compliance with the relevant law, which is summarized. A correct
inference will be a statement that must follow from at least part of the premises given.
(A) It does not have to be true that the law costs the businesses money, as no evidence about the relative costs is given.
(B) This choice is an irrelevant comparison, as the preferences of the executives are not the concern of the statements.
(C) This choice does not have to follow, as there is no information given about the travel arrangements made by large companies. The statements only indicate
that the majority of private planes are not owned by large companies.
(D) There is no information given about the travel arrangements of upper level executives and no reason to believe that those with the companies discussed do not comply with their companies’ policies.
(E) If, as the statements indicate, the companies are in full compliance with this law, it must be true that the executives following their guidelines also are. - Correct

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Manager
Joined: 03 Dec 2018
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19 Feb 2019, 10:49
I understand why E is correct.

But giving A a thought, because businesses are buying private aircraft doesn't the law indirectly cost the businesses?
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21 Feb 2019, 17:19
1
mallya12 wrote:
I understand why E is correct.

But giving A a thought, because businesses are buying private aircraft doesn't the law indirectly cost the businesses?

You ask a great question, Mallya.

(A) is a very tempting choice. Why? Because what the passage says indicates that the law indirectly forces companies to buy private aircraft because they are not in a position to reimburse employees for use of private aircraft, and a quite reasonable next step is to think is that purchasing aircraft is likely more expensive than reimbursing employees for use of planes. We would base this conclusion on the assumption that, if buying aircraft didn't cost more than reimbursing employees for use of aircraft, companies would buy aircraft rather than reimburse even if the law didn't require them to do so.

However, what the passage says does not fully support the conclusion that purchasing costs more than reimbursing. The passage does not say anything about the relative costs, and it could be the case that purchasing an aircraft turns out to cost no more than reimbursing employees for use of private aircraft.

Since what the passage says does not indicate that it has to be true that purchasing aircraft costs companies more than would reimbursing employees for use of aircraft, (A) is not the correct answer, because the answer to an Inference question has to be a conclusion that must be true if what the passage says is true.
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Re: Federal law prohibits businesses from reimbursing any   [#permalink] 21 Feb 2019, 17:19
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