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?

N560.00

N2,450.00

N2,800.00

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

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