A tax payer is allowed \(\frac{1}{8}\)th of his income tax-free, and pays 20% on the remainder. If he pays N490.00 tax, what is his income?
A. N560.00 B. N2,450.00 C. N2,800.00 D. N3,920.00
Correct Answer: C
Explanation
He pays tax on 1 - \(\frac{1}{8}\) = \(\frac{7}{8}\)th of his income 20% is 490, 100% is \(\frac{100}{20}\) x 490, N2,450.00 = \(\frac{7}{8}\) of his income = N2,450.00 \(\frac{1}{\frac{7}{8}}\) x 2450 = \(\frac{8 \times 2450}{7}\) = \(\frac{19600}{7}\) = N2800.00
