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M18-36

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M18-36  [#permalink]

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New post 16 Sep 2014, 01:05
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E

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  65% (hard)

Question Stats:

61% (01:50) correct 39% (02:26) wrong based on 170 sessions

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A monthly income of $5000 or less is taxed at 30% while every dollar in excess of $5000 is taxed at 40%. If Tom paid $1260 in taxes in September and $2860 in taxes in October, what was the percentage increase in Tom's pre-tax earnings from September to October?

A. 40%
B. 50%
C. 75%
D. 80%
E. 100%

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Re M18-36  [#permalink]

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New post 16 Sep 2014, 01:05
2
Official Solution:

A monthly income of $5000 or less is taxed at 30% while every dollar in excess of $5000 is taxed at 40%. If Tom paid $1260 in taxes in September and $2860 in taxes in October, what was the percentage increase in Tom's pre-tax earnings from September to October?

A. 40%
B. 50%
C. 75%
D. 80%
E. 100%


Because Tom paid $1260 (which is \(\lt $1500\), 30% of $5000) in taxes in September, he earned less than $5000 in that month. As the tax rate was 30%, we can conclude that Tom earned \(\frac{1260}{30}*100 = 4200\) USD in September. In October, Tom paid $1500 for the first $5000 earned and \(2860 - 1500 = 1360\) USD for his over-5000 income. Thus, in October Tom earned \(5000 + \frac{1360}{40}*100 = 5000 + 3400 = 8400\) USD. This amount is twice as large as what Tom earned in September. That is, Tom's earnings grew by 100% from September to October.


Answer: E
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Re: M18-36  [#permalink]

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New post 04 Jul 2018, 03:28
Hi Bunuel ,

Shouldn't we tax the whole amount at 40% for salaries greater than 5000 dollars?

For example, tax on 6000 salary would equal 6000*0.4=24

Thanks in advance!

Cheers,
Sushil
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Re: M18-36  [#permalink]

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New post 04 Jul 2018, 03:30
Correction: 2400*
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Re: M18-36  [#permalink]

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New post 04 Jul 2018, 03:38
Sushil_Sali15 wrote:
Hi Bunuel ,

Shouldn't we tax the whole amount at 40% for salaries greater than 5000 dollars?

For example, tax on 6000 salary would equal 6000*0.4=24

Thanks in advance!

Cheers,
Sushil


A monthly income of $5000 or less is taxed at 30% while every dollar in excess of $5000 is taxed at 40%.

So, $5,000 or less is taxed at 30%. If an income is more, then the first 5,000 is taxed at 30% and everything above that is taxed at 40%.

For example, an income of 6,000 would be taxed as follows: 5000*0.3 + (6000 - 5000)*0.4 = 1900.
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New to the Math Forum?
Please read this: Ultimate GMAT Quantitative Megathread | All You Need for Quant | PLEASE READ AND FOLLOW: 12 Rules for Posting!!!

Resources:
GMAT Math Book | Triangles | Polygons | Coordinate Geometry | Factorials | Circles | Number Theory | Remainders; 8. Overlapping Sets | PDF of Math Book; 10. Remainders | GMAT Prep Software Analysis | SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) | Tricky questions from previous years.

Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


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Re: M18-36  [#permalink]

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New post 04 Jul 2018, 04:02
Thanks much Bunuel !

Appreciate big time
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Re: M18-36 &nbs [#permalink] 04 Jul 2018, 04:02
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