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Arithmetic percents

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Arithmetic percents [#permalink] New post 21 Jan 2012, 17:42
Company K's earnings were $12 million last year. If this year's earnings are projected to be 150 percent greater than last year's earnings. If this year's earnings are projected to be 150 percent greater than last year's earnings, what are company K's projected earnings last year?

Ans. 30 million
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Re: Arithmetic percents [#permalink] New post 21 Jan 2012, 19:01
This question is testing the concept of a percent increase. Many students incorrectly choose $18M by performing the following calculation: $12M * 1.5 = $18M.

The key to the question is understanding the language of X percent greater

If X is 10% greater than Y, that means X = the value of Y + 10% of the value of Y. Mathematically, we can represent this as X = Y + .1Y or X = 1.1Y

Using the same set up for this question we get:

This year's earnings = Last year's earnings + 150% of last years earnings.
This year = Last year + 1.5(Last year)
This year = 2.5(Last year)

We know "Last year" is $12M, so this year equals 2.5($12M) or $30M

We actually have a lesson video that explains the concept of percent increases and decreases in detail here:
GMAT Percent Increases and Decreases

I hope this helps, and let me know if you have any other questions!
Bhavin
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Bhavin Parikh
Magoosh Test Prep

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Re: Arithmetic percents   [#permalink] 21 Jan 2012, 19:01
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