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Director
Joined: 20 Jul 2004
Posts: 592

Next year, a certain executive will receive a 15percent [#permalink]
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06 Sep 2004, 21:49
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Next year, a certain executive will receive a 15percent increase in base salary, but will no longer receive her $8000 yearly bonus. If next year's salary represents a 7percent net increase in income from this year, what is this year's base salary?
A) 100,000
B) 105,000
C) 107,000
D) 115,000
E) 123,050
Please explain your answers.



Director
Joined: 16 Jun 2004
Posts: 891

Six figure salaries are interesting, so this question interests me.
(115/100)X  8000 = (107/100)X
X=100,000



Manager
Joined: 31 Dec 2003
Posts: 214
Location: US

Let this years base salary be x.
then 1.07 (x + 8000 ) = 1.15x
x= 107000,hence C.



Manager
Joined: 28 Jul 2004
Posts: 54

answer is 100000
anuram check ur answer...
the increase comes to 7.52 % in ur case..
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Jim



Director
Joined: 16 Jun 2004
Posts: 891

Let me start over again.
let the base salary be X this year.
The net income this year = X+8000 (missed net income)
Next year the salary will be = 1.15 X
1.15X = 1.07(X+8000)
=>0.08X=8560
=>X= 8560/0.08 = 107000.
Anuramm, you are right.



GMAT Club Legend
Joined: 07 Jul 2004
Posts: 5043
Location: Singapore

This year's base salary = n
Bonus = 8000
So total salary = n+8000
Next year,
base salary = 1.15n
Bonus = 0
Total salary = 1.15n
(1.15n  n  8000)/n * 100% = 7%
(0.15n8000) = 0.07n
0.08n = 8000
n = 100,000
(A) is the answer



Manager
Joined: 31 Aug 2004
Posts: 162
Location: Vancouver, BC, Canada

My answer is 107000 as well, but after I saw the solutions from ywilfred and jimishg, I have a question for you guys:
What is your definition of income? Do you agree or disagree the following
Income = Base salary + Bonus
If bonus does not account for your income, then how do we call it?
This is where we can two different answers. For people who get 107000, we treat bonus as a portion of income; for people who get 100000, they think bonus is not a part of income.
We need OA, pls!
Last edited by jinino on 07 Sep 2004, 20:36, edited 1 time in total.



Manager
Joined: 05 Sep 2004
Posts: 97

Re: PS: Salary Increase [#permalink]
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07 Sep 2004, 13:08
hardworker_indian wrote: If next year's salary represents a 7percent net increase in income from this year
What do you mean by this sentence? The way I read it is:
Next year's salary = 1.15 * current salary = Net increase in income = 7% = Next year's salary  current salary ? .... which is over the top.
Could you please clarify?



Manager
Joined: 02 Apr 2004
Posts: 222
Location: Utrecht

I would choose A.
The reason is that in the question it is mentioned that the person in the second year will not get his or her yearly bonus of $ 8000. Therefore I believe the bonus will not be part of the income as I assume the bonus is yearly fixed on $ 8000.
Please correct me if I am wrong.
Regards,
Alex



Director
Joined: 31 Aug 2004
Posts: 606

Today : F+V F?
Next year : F'+V'
F'= 1,15F
V'=0
V=8000
(F'+V')=1,07(F+V)
0,08F=1,07*8000=> F= 107000



Director
Joined: 05 May 2004
Posts: 574
Location: San Jose, CA

Got 107K
.07(S+8000)=1.15S(S+8000) ... solve S



Director
Joined: 20 Jul 2004
Posts: 592

venksune wrote: Six figure salaries are interesting, so this question interests me. (115/100)X  8000 = (107/100)X X=100,000 I too did like this and got it wrong. The mistake in this is that we are subtracting the nonexistant boonus from next years salary, whereas it should be added with current year's salary to make it an "income". OA is (C) 107,000. Anuramm's method is simple and correct. anuramm wrote: Let this years base salary be x. then 1.07 (x + 8000 ) = 1.15x x= 107000,hence C. jinino wrote: What is your definition of income? Do you agree or disagree the following: Income = Base salary + Bonus
Yes, this is correct.



Director
Joined: 16 Jun 2004
Posts: 891

Yes, realised the mistake and corrected it in one of my earlier posts. good one.



Manager
Joined: 21 Aug 2004
Posts: 135

Next year, a certain executive will receive a 15percent increase in base salary, but will no longer receive her $8000 yearly bonus. If next year's salary represents a 7percent net increase in income from this year, what is this year's base salary?
Let this years base salary = x
Total income this year = x + 8000
Total income next year = 1.15x
now 1.15x = 1.07(x + 8000)
X = 107,000



Manager
Joined: 18 Jun 2004
Posts: 103
Location: san jose , CA

i used the following equation
1.15x = 1.07(x+8000)
x = 107,000
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