Reading Time: < 1 minute
Last Updated on May 3, 2023
GMAT OFFICIAL GUIDE PS
Solution:
Although this problem seems challenging it is actually a simple word translation.
We know that when Leo imports a certain item he pays a 7% import tax on the portion of the total value IN EXCESS OF $1,000. “In excess of” is the key phrase here, and it means that Leo does not pay any tax on his items until he hits $1,000. The best way to complete this problem is to set up an equation.
First, let’s say that T = total value of the item, and, therefore, (T – 1000) is the portion that is taxable.
Next, we can create an equation to determine T:
87.5 = 0.07(T – 1,000)
87.5 = 0.07T – 70
157.5 = 0.07T
157.5/0.07 = T
15,750/7 = T
T = 2,250
Answer: C
