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 is C

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