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Veritas Prep GMAT Instructor V
Joined: 16 Oct 2010
Posts: 10477
Location: Pune, India
John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

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6
16 00:00

Difficulty:   65% (hard)

Question Stats: 66% (02:30) correct 34% (02:48) wrong based on 424 sessions

### HideShow timer Statistics

John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

A. 32%
B. 34.4%
C. 35%
D. 35.6%
E. 36.4%

It is one of my favorite problems from the Veritas Arithmetic book.. I like to use Weighted Averages here...

_________________
Karishma
Veritas Prep GMAT Instructor

Veritas Prep GMAT Instructor V
Joined: 16 Oct 2010
Posts: 10477
Location: Pune, India
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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10
14
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

a. 32%
b. 34.4%
c. 35%
d. 35.6%
e. 36.4%

Great solution everyone! Yes, the answer is (D) 35.6.

Now let me explain why I like this question. The big numbers - 56000 and 72000 have limited utility. I could have as well given 86380 and 111060 as their salaries; I would have still obtained the same answer!
We need to find the weighted average of their tax rate. The important thing is their individual tax rates and the ratio of their salaries 7:9 (56000:72000), not the actual salaries

Attachment: Ques1.jpg [ 3.44 KiB | Viewed 11066 times ]

The length between 30% and 40% i.e. 10% is split in the ratio 9:7.
So the average will be at (9/16)*10 + 30 = 35.6%.

So you don't have to do any long calculations. If there is a doubt in this method, check out this link:
http://gmatclub.com/forum/tough-ds-105651.html#p828579

When we want to find the average of lets say age of 2 groups - one group has average age of 30 yrs and there are 10 people in it and the other group has average age of 40 yrs and there are 40 people in it, all we need is the relative weights (relative number of people) in the two groups i.e. 1:4. It doesn't matter whether there are 10 and 40 people or 100 and 400 people... It's exactly the same concept here.

Let me know if there is a doubt in this concept.

and when we say, "A makes \$100,000," we mean gross by default. Taxes are a part of your salary just like your other expenses.
_________________
Karishma
Veritas Prep GMAT Instructor

##### General Discussion
Manager  Joined: 18 Oct 2010
Posts: 57
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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4
(0.3*56000+0.4*72000)/(72000+56000)=0.35625
D
thank you
Manager  Joined: 27 Jul 2010
Posts: 127
Location: Prague
Schools: University of Economics Prague
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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1
It would be good to specify whether they the salary they make is already taxed or not.

But anyway, is there any way to solve

(0.3*56000+0.4*72000)/(72000+56000)=0.35625

in hand?
Intern  Joined: 16 Mar 2010
Posts: 11
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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2
Code:
Income            TAX
J - 56,000        16,800
I - 72,000        28,800
-----------------------
T- 128,000       45,600

Part              X
-----     =    ------
Whole           100

45,600             X
--------   =    -----
128,000          100

45,600 * 100
X =  --------------
128,000

4560
X =  ------  = 35.6
128

short cut

4560               4560        456
X =  ------  =(approx)  ------- =     ---- = 35.07
128                130         13

As denominator has been increased answer choice should be greater than 35.07

So the Ans is 35.6%

Manager  B
Joined: 11 Jul 2009
Posts: 85
WE: Design (Computer Software)
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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1
i go with
D
(0.3*56000+0.4*72000)/(72000+56000)=0.35625
_________________
Kaustubh
Manager  Joined: 27 Jul 2010
Posts: 127
Location: Prague
Schools: University of Economics Prague
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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Thank you Karishma,

your method is very strong indeed.
Little bit reoulsive on the first look, but great when mastered.

VeritasPrepKarishma wrote:
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

a. 32%
b. 34.4%
c. 35%
d. 35.6%
e. 36.4%

Great solution everyone! Yes, the answer is (D) 35.6.

Now let me explain why I like this question. The big numbers - 56000 and 72000 have limited utility. I could have as well given 86380 and 111060 as their salaries; I would have still obtained the same answer!
We need to find the weighted average of their tax rate. The important thing is their individual tax rates and the ratio of their salaries 7:9 (56000:72000), not the actual salaries

Attachment:
Ques1.jpg

The length between 30% and 40% i.e. 10% is split in the ratio 9:7.
So the average will be at (9/16)*10 + 30 = 35.6%.

So you don't have to do any long calculations. If there is a doubt in this method, check out this link:
http://gmatclub.com/forum/tough-ds-105651.html#p828579

When we want to find the average of lets say age of 2 groups - one group has average age of 30 yrs and there are 10 people in it and the other group has average age of 40 yrs and there are 40 people in it, all we need is the relative weights (relative number of people) in the two groups i.e. 1:4. It doesn't matter whether there are 10 and 40 people or 100 and 400 people... It's exactly the same concept here.

Let me know if there is a doubt in this concept.

and when we say, "A makes \$100,000," we mean gross by default. Taxes are a part of your salary just like your other expenses.
Intern  Joined: 28 Mar 2011
Posts: 23
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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1
Hi Karishma,

I really love the weighted averages shortcut method you use every time,but I get confused in using it.

Thanks!

regards,
Veritas Prep GMAT Instructor V
Joined: 16 Oct 2010
Posts: 10477
Location: Pune, India
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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2
dkj1984 wrote:
Hi Karishma,

I really love the weighted averages shortcut method you use every time,but I get confused in using it.

Thanks!

regards,

When we use the formula of weighted averages, we say that one quantity is A1 and its weight is w1. Another is A2 and its weight is w2. We have to find the average Aavg.
The formula is w1/w2 = (A2 - Aavg)/(Aavg - A1)

Notice that you have w1 in numerator on LHS and A2 in numerator on RHS.
Check out these posts on how the formula is derived and how it is used:
http://www.veritasprep.com/blog/2011/03 ... -averages/
http://www.veritasprep.com/blog/2011/04 ... ge-brutes/
_________________
Karishma
Veritas Prep GMAT Instructor

Manager  Joined: 20 Dec 2010
Posts: 153
Schools: UNC Duke Kellogg
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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Nice shortcut method!!...Great!
Intern  Joined: 28 Mar 2011
Posts: 23
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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Hi Karishma,

Thanks a ton!

terrific explanation in the links provided. Regards,
Intern  Joined: 28 Apr 2012
Posts: 14
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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VeritasPrepKarishma wrote:
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

a. 32%
b. 34.4%
c. 35%
d. 35.6%
e. 36.4%

Great solution everyone! Yes, the answer is (D) 35.6.

Now let me explain why I like this question. The big numbers - 56000 and 72000 have limited utility. I could have as well given 86380 and 111060 as their salaries; I would have still obtained the same answer!
We need to find the weighted average of their tax rate. The important thing is their individual tax rates and the ratio of their salaries 7:9 (56000:72000), not the actual salaries

Attachment:
Ques1.jpg

The length between 30% and 40% i.e. 10% is split in the ratio 9:7.
So the average will be at (9/16)*10 + 30 = 35.6%.

So you don't have to do any long calculations. If there is a doubt in this method, check out this link:
http://gmatclub.com/forum/tough-ds-105651.html#p828579

When we want to find the average of lets say age of 2 groups - one group has average age of 30 yrs and there are 10 people in it and the other group has average age of 40 yrs and there are 40 people in it, all we need is the relative weights (relative number of people) in the two groups i.e. 1:4. It doesn't matter whether there are 10 and 40 people or 100 and 400 people... It's exactly the same concept here.

Let me know if there is a doubt in this concept.

and when we say, "A makes \$100,000," we mean gross by default. Taxes are a part of your salary just like your other expenses.

I am lost at (9/16)*10 + 30 = 35.6%. where YOU add 30. I want to learn how to use this method completely so I can have it in my back pocket ready to use. I feel that we already found the ratio and then flipped it so it would be the distance and could put it in the chart. We divided 9/16 to find the middle number that was missing and multiplied by 10 because that was the weight? Is the only reason because 10+30 = the original 40?
Veritas Prep GMAT Instructor V
Joined: 16 Oct 2010
Posts: 10477
Location: Pune, India
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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dcastan2 wrote:
I am lost at (9/16)*10 + 30 = 35.6%. where YOU add 30. I want to learn how to use this method completely so I can have it in my back pocket ready to use. I feel that we already found the ratio and then flipped it so it would be the distance and could put it in the chart. We divided 9/16 to find the middle number that was missing and multiplied by 10 because that was the weight? Is the only reason because 10+30 = the original 40?

The distance between 30 and 40 i.e. 10 has to be split in the ratio 9:7. The average is 9 (of these 16 units) to the right of 30. So you find 9/16th of 10 which is 90/16 and add it to 30.

Before you work on this question, check out the links mentioned in the post above. I have discussed simpler numbers in them. They will give you a feel for the method. Thereafter, you can solve any question using this method.
_________________
Karishma
Veritas Prep GMAT Instructor

Senior Manager  Joined: 13 Aug 2012
Posts: 386
Concentration: Marketing, Finance
GPA: 3.23
Re: A Problem from Veritas Arithmetic Book  [#permalink]

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Using weighted averages...

(1) When 30 and 40 has equal weight or weight = 1/2, the answer would be 35.
(2) When 40 has larger weight than 30, the answer would be in between 35 and 40. Unfortunately, we have 2 answer choices D and E that fit that condition so we need to narrow down our range.
(3) Get 72000/128000 = 72/128 = 9/16. 9/16 is a little above 8/16 = 1/2. Thus, our answer is just a little above 35.

For details on Weighted Averages: Weighted Averages
MBA Section Director V
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Joined: 21 Feb 2012
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City: Pune
Re: John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

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4
7
Here is another approach
Attachments Untitled.png [ 51.62 KiB | Viewed 8127 times ]

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Senior Manager  Joined: 10 Jul 2013
Posts: 274
Re: John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

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VeritasPrepKarishma wrote:
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

A. 32%
B. 34.4%
C. 35%
D. 35.6%
E. 36.4%

It is one of my favorite problems from the Veritas Arithmetic book.. I like to use Weighted Averages here...

(0.3 * 56000 + 0.4 * 72000) / (72000 + 56000) = 0.356 = 35.6% = D (Answer)
VP  Joined: 06 Sep 2013
Posts: 1494
Concentration: Finance
Re: John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

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VeritasPrepKarishma wrote:
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

A. 32%
B. 34.4%
C. 35%
D. 35.6%
E. 36.4%

It is one of my favorite problems from the Veritas Arithmetic book.. I like to use Weighted Averages here...

Ratio is 56/72 = 8/9

Weighted average is therefore ((30)(8) + (40)(9))/17 = 600/17=35.6%

Hope it helps
Cheers!
J Manager  S
Joined: 11 Sep 2013
Posts: 130
Concentration: Finance, Finance
Re: John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

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ratio of their salaries 7:9 (56000:72000)
30 40
X
40-x x-30
(40-x):(x-30) = 7: 9
X= 35.6%
Board of Directors P
Joined: 17 Jul 2014
Posts: 2432
Location: United States (IL)
Concentration: Finance, Economics
GMAT 1: 650 Q49 V30 GPA: 3.92
WE: General Management (Transportation)
Re: John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

### Show Tags

VeritasPrepKarishma wrote:
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

a. 32%
b. 34.4%
c. 35%
d. 35.6%
e. 36.4%

Great solution everyone! Yes, the answer is (D) 35.6.

Now let me explain why I like this question. The big numbers - 56000 and 72000 have limited utility. I could have as well given 86380 and 111060 as their salaries; I would have still obtained the same answer!
We need to find the weighted average of their tax rate. The important thing is their individual tax rates and the ratio of their salaries 7:9 (56000:72000), not the actual salaries

Attachment:
Ques1.jpg

The length between 30% and 40% i.e. 10% is split in the ratio 9:7.
So the average will be at (9/16)*10 + 30 = 35.6%.

So you don't have to do any long calculations. If there is a doubt in this method, check out this link:
http://gmatclub.com/forum/tough-ds-105651.html#p828579

When we want to find the average of lets say age of 2 groups - one group has average age of 30 yrs and there are 10 people in it and the other group has average age of 40 yrs and there are 40 people in it, all we need is the relative weights (relative number of people) in the two groups i.e. 1:4. It doesn't matter whether there are 10 and 40 people or 100 and 400 people... It's exactly the same concept here.

Let me know if there is a doubt in this concept.

and when we say, "A makes \$100,000," we mean gross by default. Taxes are a part of your salary just like your other expenses.

I always get messed up when trying to use this method...ended up the direct one...
56,000 = 100%
5,600=10%
11,200 = 20%
28,000 = 50%
16800 = 30%

72,000 = 100%
36,000 = 50%
7,200 = 10%
28,800 = 40%

now..
28,800+16,800=45600
total amount: 128,000

45,600/128,000 = 456/1280 = 228/640 = 114/320 = 57/160. clearly it is more than 33% since 60/180 is 1/3 or 33%. A is out right away...
now...long division....
57/160 = 0.35625

so 35.625%

closest one: D
Senior Manager  G
Joined: 21 Feb 2017
Posts: 484
Re: John and Ingrid pay 30% and 40% tax annually, respectively.  [#permalink]

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1
John and Ingrid pay 30% and 40% tax annually, respectively. If John makes \$56000 and Ingrid makes \$72000, what is their combined tax rate?

A. 32%
B. 34.4%
C. 35%
D. 35.6%
E. 36.4%

It is one of my favorite problems from the Veritas Arithmetic book.. I like to use Weighted Averages here...

Diagrammatic approach
Attachments IMG_1263.jpeg [ 64.25 KiB | Viewed 575 times ] Re: John and Ingrid pay 30% and 40% tax annually, respectively.   [#permalink] 23 Feb 2020, 02:48

# John and Ingrid pay 30% and 40% tax annually, respectively.  