Question: In a company of only 20 employees, 10 employees make $80,000/yr, 6 employees make $150,000/yr, and the 4 highest-paid employees all make the same amount. If the average annual salary for the 20 employees is $175,000/yr, then what is the annual salary of each highest-paid employee?

(A) $250,000
(B) $300,000
(C) $350,000
(D) $400,000
(E) $450,000

“In a company of only 20 employees, 10 employees make $80,000/yr” - is a topic of the GMAT Quantitative reasoning section of GMAT. To solve GMAT Problem Solving questions a student must have knowledge about a good number of qualitative skills. GMAT Quant section consists of 31 questions in total. The GMAT quant topics in the problem-solving part require calculative mathematical problems that should be solved with proper mathematical knowledge.

Solutions and Explanation

Approach Solution : 1

The weighted average of all the groups = (group A proportion) + (group A average) + (group B proportion) + (group C proportion) + etc.

To make things simpler, let us write $80 instead of $80,000 dropping thousands.

Let x represent the highest-paid employee's yearly salary.

Fill in the values in the formula to obtain, 175 = (10/20)(80) + (6/20)(150) + (4/10)(x)

Therefore we get, 175 = 40 + 45 + x/5

Which yields, 90 = x/5

As a result, x = 450.

Now add the thousand we dropped to x.

Consequently, the highest-paid employee's annual salary is $450,000.

Correct Answer: (E)

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