A tax payer is allowed (frac{1}{8})th of his income taxfree, 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: Option 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