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 Your Progress

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

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 500,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

In Millington, a city of 50,000 people, Mercedes Pedrosa, a [#permalink]

Show Tags

18 Jun 2005, 07:41

00:00

A

B

C

D

E

Difficulty:

(N/A)

Question Stats:

0% (00:00) correct
0% (00:00) wrong based on 0 sessions

HideShow timer Statistics

In Millington, a city of 50,000 people, Mercedes Pedrosa, a realtor, calculated that a family with Millingtonâ€™s median family income, $28,000 a year, could afford to buy Millingtonâ€™s median-priced $77,000 house. This calculation was based on an 11.2 percent mortgage interest rate and on the realtorâ€™s assumption that a family could only afford to pay up to 25 percent of its income for housing.
Which of the following corrections of a figure appearing in the passage above, if it were the only correction that needed to be made, would yield a new calculation showing that even incomes below the median family income would enable families in Millington to afford Millingtonâ€™s median-priced house?
(A) Millingtonâ€™s total population was 45,000 people.
(B) Millingtonâ€™s median annual family income was $27,000.
(C) Millingtonâ€™s median-priced house cost $80,000.
(D) The rate at which people in Millington had to pay mortgage interest was only 10 percent.
(E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing.

Which of the following corrections of a figure appearing in the passage above, if it were the only correction that needed to be made, would yield a new calculation showing that even incomes below the median family income would enable families in Millington to afford Millingtonâ€™s median-priced house?

(D) The rate at which people in Millington had to pay mortgage interest was only 10 percent.

Doesn't take a finance major to see that we're looking for an answer choice in which an even poorer family can still afford to buy a house based on the formulation described.

(A) is irrelevent to the affordability formula, and B/C/E introduce circumstances that would make it more exepensive to buy a house.

Only (D) has the effect of making mortgages cheaper owing to a lower interest rate, and therefore accessible to even lower-income families than the median.

Best Schools for Young MBA Applicants Deciding when to start applying to business school can be a challenge. Salary increases dramatically after an MBA, but schools tend to prefer...

Marty Cagan is founding partner of the Silicon Valley Product Group, a consulting firm that helps companies with their product strategy. Prior to that he held product roles at...