Last visit was: 24 Apr 2026, 16:04 It is currently 24 Apr 2026, 16:04
Home
Messages
Tests
Schools
Events
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel
Back to Forum
Create Topic
User avatar
eva.carita
User avatar
Joined: 11 Sep 2023
Last visit: 22 Aug 2024
Posts: 4
Own Kudos:
186
 [33]
Given Kudos: 4
Posts: 4
Kudos: 186
 [33]
A certain insurance company pays verified claims on an individual basi Updated on: 25 Jan 2024, 04:10
Originally posted by eva.carita on 19 Nov 2023, 10:56.
Last edited by Bunuel on 25 Jan 2024, 04:10, edited 2 times in total.
2
Kudos
Add Kudos
31
Bookmarks
Bookmark this Post
00:00
Start Timer
Pause Timer
Resume Timer
Show Answer
Hide
Show
History
A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

Difficulty:

35% (medium)

Question Stats:

77% (02:28) correct 23% (02:44) wrong based on 815 sessions

History

Date
Time
Result
Not Attempted Yet
A certain insurance company pays verified claims on an individual basis as follows: 0 percent of the first $500 of the claim, 80 percent of the next $2,500 of the claim, and 90 percent of the amount of the claim in excess of $3,000. What is the total paid for two verified claims of $2,000 and $25,000, respectively?

A) $23,000
B) $23,500
C) $24,000
D) $24,500
E) $25,000


Show Spoiler
Attachment:
prep.png
prep.png [ 56.98 KiB | Viewed 10068 times ]

Can someone please explain why is the answer A the correct choice?
I did each claim first and then summed it up but still i cannot get to A. I think it must be simple but i must be doing something wrong.

Thank you advance for the help!
ShowHide Answer
Official Answer
A
Need more Tests to Practice? GMAT Club Tests give expert solutions for every question in full and sectional GMAT Focus mocks. Learn more →
Most Helpful Reply
User avatar
gmatophobia
User avatar
Quant Chat Moderator
Joined: 22 Dec 2016
Last visit: 19 Apr 2026
Posts: 3,173
Own Kudos:
11,462
 [6]
Given Kudos: 1,862
Location: India
Concentration: Strategy, Leadership
Posts: 3,173
Kudos: 11,462
 [6]
A certain insurance company pays verified claims on an individual basi 19 Nov 2023, 11:43
4
Kudos
Add Kudos
2
Bookmarks
Bookmark this Post
eva.carita
A certain insurance company pays verified claims on an individual basis as follows: 0 percent of the first $500 of the claim, 80 percent of the next $2,500 of the claim, and 90 percent of the amount of the claim in excess of $3,000. What is the total paid for two verified claims of $2,000 and $25,000, respectively?

a) $23,000
b) $23,500
c) $24,000
d) $24,500
e) $25,000
Show more

Verified Claim of $2000

  • $0 < claim < $500 ⇒ 0%
    Claim Amount = $0
  • $500 \(\leq\) claim < $3,000 ⇒ 80% * (amount - $500)
    Claim Amount = 0.8 * (2000 - 500) = 0.8 * $1,500 = $ 1,200

Verified Claim of $25,000

  • $0 < claim < $500 ⇒ 0%
    Claim Amount = $0
  • $500 \(\leq\) claim < $3,000 ⇒ 80% * (amount - $500)
    In this case, as $25,000 exceeds $3,000, the person receives 80% of the entire eligible amount in this segment
    Claim Amount = 0.8 * $(3000 - 500) = 0.8 * $2,500 = $2,000
  • $3000 \(\leq\) claim ⇒ 90% * (amount - $3000)
    Claim Amount = 0.9 * $(25,000 - 3,000) = 0.9 * $22,000 = $19,800

Total Claim = $1,200 + $2,000 + $19,800 = $23,000

Option A
General Discussion
User avatar
JoeAa
User avatar
Joined: 09 Aug 2020
Last visit: 08 Apr 2024
Posts: 39
Own Kudos:
19
 [1]
Given Kudos: 33
Posts: 39
Kudos: 19
 [1]
A certain insurance company pays verified claims on an individual basi 23 Jan 2024, 05:47
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
wt's the way to shorten cal time?
by the time writing all these cal it's already 2.5 min
User avatar
ritz07
User avatar
Joined: 03 Apr 2024
Last visit: 30 Mar 2025
Posts: 48
Own Kudos:
34
Given Kudos: 34
Location: India
Schools: ISB '27 (D)
Schools: ISB '27 (D)
Posts: 48
Kudos: 34
A certain insurance company pays verified claims on an individual basi 14 Aug 2024, 03:56
Kudos
Add Kudos
Bookmarks
Bookmark this Post
gmatophobia Bunuel

The first claim calculation is confusing. How is 80% even applicable to the first claim?
Q says - "80 percent of the next $2,500 of the claim"
Total remaining amount after deducting 500 is 1500 which is less than 2,500. How can we assume that 80% should be applied to this 1500 when it says next 2500?
User avatar
Bunuel
User avatar
Math Expert
Joined: 02 Sep 2009
Last visit: 24 Apr 2026
Posts: 109,818
Own Kudos:
811,077
Given Kudos: 105,873
Products:
GMAT Club Tests Forum Quiz
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
Posts: 109,818
Kudos: 811,077
A certain insurance company pays verified claims on an individual basi 15 Aug 2024, 01:30
Kudos
Add Kudos
Bookmarks
Bookmark this Post
ritz07

A certain insurance company pays verified claims on an individual basis as follows: 0 percent of the first $500 of the claim, 80 percent of the next $2,500 of the claim, and 90 percent of the amount of the claim in excess of $3,000. What is the total paid for two verified claims of $2,000 and $25,000, respectively?

A) $23,000
B) $23,500
C) $24,000
D) $24,500
E) $25,000

gmatophobia Bunuel

The first claim calculation is confusing. How is 80% even applicable to the first claim?
Q says - "80 percent of the next $2,500 of the claim"
Total remaining amount after deducting 500 is 1500 which is less than 2,500. How can we assume that 80% should be applied to this 1500 when it says next 2500?
Show more
­
The phrase "80 percent of the next $2,500 of the claim" means that 80% is applied to the portion of the claim between $500 and $3,000 (i.e., $500 + $2,500). So, even if the remaining amount after the first $500 is less than $2,500, 80% is still applied to that portion. In the case of a $2,000 claim, 80% is applied to the $1,500 remaining after the first $500.­
User avatar
daynesj24
User avatar
Joined: 26 May 2024
Last visit: 22 Dec 2024
Posts: 15
Own Kudos:
3
Given Kudos: 5
Posts: 15
Kudos: 3
A certain insurance company pays verified claims on an individual basi 27 Sep 2024, 17:13
Kudos
Add Kudos
Bookmarks
Bookmark this Post
So the 0% for the first 500, only applies for the first 500 dollars worth of the claim, am I reading that right? I think I did it wrong because I subtracted the 500 for both claims. Thanks.
User avatar
Bunuel
User avatar
Math Expert
Joined: 02 Sep 2009
Last visit: 24 Apr 2026
Posts: 109,818
Own Kudos:
811,077
 [2]
Given Kudos: 105,873
Products:
GMAT Club Tests Forum Quiz
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
Posts: 109,818
Kudos: 811,077
 [2]
A certain insurance company pays verified claims on an individual basi 30 Sep 2024, 00:42
2
Kudos
Add Kudos
Bookmarks
Bookmark this Post
daynesj24

Bunuel
ritz07

A certain insurance company pays verified claims on an individual basis as follows: 0 percent of the first $500 of the claim, 80 percent of the next $2,500 of the claim, and 90 percent of the amount of the claim in excess of $3,000. What is the total paid for two verified claims of $2,000 and $25,000, respectively?

A) $23,000
B) $23,500
C) $24,000
D) $24,500
E) $25,000

gmatophobia Bunuel

The first claim calculation is confusing. How is 80% even applicable to the first claim?
Q says - "80 percent of the next $2,500 of the claim"
Total remaining amount after deducting 500 is 1500 which is less than 2,500. How can we assume that 80% should be applied to this 1500 when it says next 2500?
­
The phrase "80 percent of the next $2,500 of the claim" means that 80% is applied to the portion of the claim between $500 and $3,000 (i.e., $500 + $2,500). So, even if the remaining amount after the first $500 is less than $2,500, 80% is still applied to that portion. In the case of a $2,000 claim, 80% is applied to the $1,500 remaining after the first $500.­
So the 0% for the first 500, only applies for the first 500 dollars worth of the claim, am I reading that right? I think I did it wrong because I subtracted the 500 for both claims. Thanks.
Show more

Here it is again:

Claim = $2,000
Paid: 0% of the first $500 + 80% of the remaining $1,500 = $1,200

Claim = $25,000
Paid: 0% of the first $500 + 80% of the next $2,500 + 90% of the remaining $22,000 = $21,800

Total: $1,200 + $21,800 = $23,000

Answer: A.
User avatar
onlymalapink
User avatar
Joined: 06 Aug 2024
Last visit: 24 Aug 2025
Posts: 81
Own Kudos:
13
Given Kudos: 749
Posts: 81
Kudos: 13
A certain insurance company pays verified claims on an individual basi 18 Jul 2025, 14:24
Kudos
Add Kudos
Bookmarks
Bookmark this Post
I'm sorry but I dint see how for the next implies between i took 0 for the first claim, i guess the only real option for questions like this is solve as you see them and then see that your answer doesnt match and then reinterpret the question hopefully.
User avatar
manasmridulmitra
User avatar
Joined: 07 Jan 2025
Last visit: 07 Nov 2025
Posts: 8
Own Kudos:
6
Given Kudos: 18
GMAT Focus 1: 575 Q82 V80 DI74
GMAT Focus 1: 575 Q82 V80 DI74
Posts: 8
Kudos: 6
A certain insurance company pays verified claims on an individual basi 20 Jul 2025, 07:08
Kudos
Add Kudos
Bookmarks
Bookmark this Post
For claim of $2000
We take:
$2000 - $500 = $1500
⇒ Paid = (80 / 100) × 1500 = $1200

For claim of $25,000
We take:
Initial $3000 (deduct $500 from here)
⇒ Paid = (80 / 100) × (3000 - 500)
= (80 / 100) × 2500
= $2000

⇒ Now finally:
$25,000 - $3000 = $22,000
⇒ Paid = (90 / 100) × 22000 = $19800

Total paid = $19,800 + $2000 + $1200
= $23,000 ✅ Ans

eva.carita
A certain insurance company pays verified claims on an individual basis as follows: 0 percent of the first $500 of the claim, 80 percent of the next $2,500 of the claim, and 90 percent of the amount of the claim in excess of $3,000. What is the total paid for two verified claims of $2,000 and $25,000, respectively?

A) $23,000
B) $23,500
C) $24,000
D) $24,500
E) $25,000


Show Spoiler
Attachment:
prep.png

Can someone please explain why is the answer A the correct choice?
I did each claim first and then summed it up but still i cannot get to A. I think it must be simple but i must be doing something wrong.

Thank you advance for the help!
Show more
Moderators:
Bunuel
Math Expert
109818 posts
Krunaal
Tuck School Moderator
853 posts