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# Next year, a certain executive will receive a 15-percent

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Director
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06 Sep 2004, 21:49
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Next year, a certain executive will receive a 15-percent increase in base salary, but will no longer receive her \$8000 yearly bonus. If next year's salary represents a 7-percent 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

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Director
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06 Sep 2004, 22:12
Six figure salaries are interesting, so this question interests me.

(115/100)X - 8000 = (107/100)X

X=100,000

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Manager
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06 Sep 2004, 23:14
Let this years base salary be x.

then 1.07 (x + 8000 ) = 1.15x

x= 107000,hence C.

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Manager
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07 Sep 2004, 00:10

the increase comes to 7.52 % in ur case..
_________________

Jim

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Director
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07 Sep 2004, 01:44
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.

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GMAT Club Legend
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07 Sep 2004, 01:51
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%
(0.15n-8000) = 0.07n
0.08n = 8000
n = 100,000

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Manager
Joined: 31 Aug 2004
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07 Sep 2004, 12:43
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.

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Manager
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07 Sep 2004, 13:08
hardworker_indian wrote:
If next year's salary represents a 7-percent 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.

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Manager
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07 Sep 2004, 13:14
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

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Director
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07 Sep 2004, 15:40
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

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Director
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07 Sep 2004, 16:01
Got 107K
.07(S+8000)=1.15S-(S+8000) ... solve S

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Director
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07 Sep 2004, 16:45
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 non-existant 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.

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Director
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07 Sep 2004, 19:28
Yes, realised the mistake and corrected it in one of my earlier posts. good one.

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Manager
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08 Sep 2004, 00:26
Next year, a certain executive will receive a 15-percent increase in base salary, but will no longer receive her \$8000 yearly bonus. If next year's salary represents a 7-percent 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

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Manager
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08 Sep 2004, 03:07
i used the following equation

1.15x = 1.07(x+8000)

x = 107,000
_________________

---- Hero never chooses Destiny
Destiny chooses Him ......

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08 Sep 2004, 03:07
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