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# Company R's annual profit has increased by a constant amount

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Intern
Joined: 25 Aug 2005
Posts: 47
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Company R's annual profit has increased by a constant amount [#permalink]  14 Oct 2005, 10:25
Company R's annual profit has increased by a constant amount each calendar year since 1985. What was Company R's annual profit in 1991?

(1) In 1985 Company R's annual profit was \$212,000; in 1989 Company R's annual profit was \$242,000

(2) Company R's annual profit has increased by \$7,500 each year since 1985
VP
Joined: 22 Aug 2005
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Location: CA
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A.
(1) as the rate of increment is constant. we can calculate rate when we know amounts at any two years.
Once rate in known we can calculate amount in 1991 using compound interest formula.

(2) insufficient unless we know amount in 1985
Manager
Joined: 15 Jul 2005
Posts: 106
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(A)

statement I gives us the profit in 1985 (\$212,000) and in 1989 (\$242,000). Since the amount of profit is constant, we know that a yearly profit increase of 7500. 1991 it will be \$257,000. sufficient

statement II doesn't give us the profit for 1985, so we dont know what it increases to in 1991. We only know that the profit amount is greater by \$45,000 in 1991.
GMAT Club Legend
Joined: 07 Jul 2004
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Location: Singapore
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Clearly, statment 1 is sufficient, while statment 2 is not sufficient as we do not have information of how much the profit is in 1985.
Senior Manager
Joined: 26 Jul 2005
Posts: 315
Location: Los Angeles
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If you're not careful, you can make an easy mistake of thinking statements 1 & 2 are equivalents. Statement 1 gives an original amount and annual profit increase (and hence you can calculate the 91 amount) whereas statement 2 only gives the annual profit increase (with no amount).

Man, I have to be careful when rushing through these problems on the test!
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