Question

Before being simplified, the instructions for computing income tax in Country R were to add 2 percent of one’s annual income to the average (arithmetic mean) of 100 units of Country R’s currency and 1 percent of one’s annual income. Which of the following represents the simplified formula for computing the income tax, in Country R’s currency, for a person in that country whose annual income is I ?A. 50 + I/200B. 50 + 3I/100C. 50 + I/40D. 100 + I/50E. 100 + 3I/100

Answer 1

option (C) 50 +
`(I)/(40)`

Explanation:

Data provided :

income tax = add 2 percent of one’s annual income to the average (arithmetic mean) of 100 units of Country R’s currency and 1 percent of one’s annual income

Annual income = I

Now,

2% of annual income = 0.02 × I

and,

the average of 100 units of Country R’s currency and 1 percent of one’s annual income

=
`(100 + 0.01I)/(2)`

Therefore,

Total income tax = 0.02 × I +
`(100 + 0.01I)/(2)`

or

=
`(0.04I+100+0.01I)/(2)`

=
`(100)/(2)+(0.04I+0.01I)/(2)`

= 50 +
`(0.05I)/(2)`

= 50 +
`(5I)/(2*100)`

or

= 50 +
`(1I)/(2*20)`

= 50 +
`(I)/(40)`

Hence, the correct answer is option (C) 50 +
`(I)/(40)`