Malcom Davis earnings is an illustration of equations and proportions.
- The equation is:
- The gross income must be $300000, for Dave to earn the same amount with either plan.
- His earning is $3333.33 when the plans are the same.
Let the profit be P, and the gross income be G.
So, we have:
<u>(a) The equations</u>
For plan A, we have:
<em /><em> ----1/90 of the company's gross income</em>
For plan B, we have:
<em /><em> ----1/90 of the company's profit</em>
When both are the same, we have:
This gives
Substitute
Hence, the equation is:
<u>(b) Solve the equation in (a), and intepret</u>
Cross multiply
Collect like terms
Divide both sides by 30
The gross income must be $300000, for Dave to earn the same amount with either plan.
<u>(c) His earnings based on (c)</u>
We have:
Substitute
His earning is $3333.33 when the plans are the same
<u>(d) If the gross income in less than (b)</u>
If the gross income is <em>less than $300,000</em>, then plan A would better for Malcom Davis, because his earnings in plan A would be <em>greater than </em>plan B
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