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/200
B. 50 + 3I/100
C. 50 + I/40
D. 100 + I/50
E. 100 + 3I/100

Answer 1

Option C)

`50 + (I)/(40)`

Explanation:

We are given the following in the question:

I is the annual income of a person in a country R

2 percent of one’s annual income =

`(2)/(100)* I = 0.02I`

1 percent of one’s annual income =

`(1)/(100)* I = 0.01I`

Average of 100 units of Country R’s currency and 1 percent of one’s annual income.

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

Income tax =

2 percent of one’s annual income + Average of 100 units of Country R’s currency and 1 percent of one’s annual income.

`= 0.02I + (100+0.01I)/(2)\\\\=50 + (0.04I + 0.01I)/(2)\\\\=50 + (0.05I)/(2)\\\\= 50 + (I)/(40)`

Thus, income tax is given by

Option C)

`50 + (I)/(40)`