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 greaterIf 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 DecreasesI hope this helps, and let me know if you have any other questions!

Bhavin

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Bhavin Parikh

Magoosh Test Prep