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# Prior to 1969, the basic corporation tax ratehad been 22

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Intern
Joined: 25 May 2003
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30 May 2003, 20:47
This topic is locked. If you want to discuss this question please re-post it in the respective forum.

Prior to 1969, the basic corporation tax ratehad been 22 percent of the first 25,000 of taxable income and 48 percent of all taxable income in excess of 25,000. in 1968, a big corporation chain formed a total of 201 separate incorporations of their outlets for the purpose of sheltering what would have otherwise been its 75 million of taxable income. If each outlet had income in excess of 25000, how much did the chain save in taxes?

A. 130,000
B. 240,000
C. 1,100,000
D. 1,300,000
E. 2,400,000

Anyone knowes how to solve it quickly?

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31 May 2003, 09:33
somratp wrote:
Prior to 1969, the basic corporation tax ratehad been 22 percent of the first 25,000 of taxable income and 48 percent of all taxable income in excess of 25,000. in 1968, a big corporation chain formed a total of 201 separate incorporations of their outlets for the purpose of sheltering what would have otherwise been its 75 million of taxable income. If each outlet had income in excess of 25000, how much did the chain save in taxes?

A. 130,000
B. 240,000
C. 1,100,000
D. 1,300,000
E. 2,400,000

Anyone knowes how to solve it quickly?

Not sure if it is fast though.

0.48*201*25,000 = roughlly it is 2,500,000 without doing exact math.

From the answer choices, the closest is 2,400,000, so I will pick that.

Any corrections?

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30 Dec 2003, 17:22
I am now in the process of checking all the previous math and verbal questions and want to bring up this one. I came up with answer (D)1,300,000. Anybody got the same answer?
_________________

Best Regards,

Paul

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30 Dec 2003, 17:38
I get D) as well. this is a calculation heavy question. I'm not sure if we'll ever see this type of question on the actual gmat.

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30 Dec 2003, 19:36
201*25000 MINUS the first corporation 200*25000 is 5,000,000
5 million at 22 percent instead of 48 percent equals
5 million times 26 percent

1.3 mm

This is an easy question!

Paul is correct.

Why has someone as bright as you, Titleist, jumped to such a hasty conclusion?

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30 Dec 2003, 20:05
One of those days. Thanks Stoolfi. I just got there differently - that's all.

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Director
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30 Dec 2003, 21:20
I kid because I love, Titleist...

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Director
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30 Dec 2003, 21:21
Hey the love's mutual!

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30 Dec 2003, 21:21
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# Prior to 1969, the basic corporation tax ratehad been 22

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