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If a brokerage firm charged a commission of 2% of the total

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If a brokerage firm charged a commission of 2% of the total [#permalink] New post 10 Jul 2011, 08:03
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Difficulty:

  25% (medium)

Question Stats:

75% (01:55) correct 25% (00:26) wrong based on 20 sessions
If a brokerage firm charged a commission of 2% of the total dollar amount of a certain trade, what was the total dollar amount of that trade?

Statement 1: The dollar amount of the trade minus the brokerage firm's commission was $88000

Statement 2: The brokerage firm's commission decreased the profit earned on the trade by 20%.

[Reveal] Spoiler: My approach
Here is my approach to solve the question. I am stuck on Statement 2 which I have presented over here.

Solution:

Lets say d be the dollar amount of that trade and c be the brokerage firm's commission.
So c=0.02d

Considering statement 1 : d - c =88000

Substitute the value of c and we can find the value of d so its sufficient.

Considering Statement 2: This is where I get stuck:

Let say p be the firm's initial profit

Its decreased by 20% = p-0.20p=0.80p. After this I get lost........ Can someone please tell me if my approach is correct and how to move ahead with statement ?
[Reveal] Spoiler: OA

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Re: Profit of the Brokerage Firm [#permalink] New post 10 Jul 2011, 10:05
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enigma123 wrote:
If a brokerage firm charged a commission of 2% of the total dollar amount of a certain trade, what was the total dollar amount of that trade?

Statement 1: The dollar amount of the trade minus the brokerage firm's commission was $88000

Statement 2: The brokerage firm's commission decreased the profit earned on the trade by 20%.

[Reveal] Spoiler: My approach
Here is my approach to solve the question. I am stuck on Statement 2 which I have presented over here.

Solution:

Lets say d be the dollar amount of that trade and c be the brokerage firm's commission.
So c=0.02d

Considering statement 1 : d - c =88000

Substitute the value of c and we can find the value of d so its sufficient.

Considering Statement 2: This is where I get stuck:

Let say p be the firm's initial profit

Its decreased by 20% = p-0.20p=0.80p. After this I get lost........ Can someone please tell me if my approach is correct and how to move ahead with statement ?



Hi Enigma,
your approach is perfect ..

st1: you are right on money

St2: clearly insufficient.
profits decreased by 20% .. so its now 80%. It says commission decreased the proflt by 20%.
you just cant solve this to get total dollar value

Do let me know if you have any problem understanding this .
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Re: Profit of the Brokerage Firm [#permalink] New post 10 Jul 2011, 10:10
Statement 2: The brokerage firm's commission decreased the profit earned on the trade by 20%.

For statement 2: Profit = S.P - C.P
Now S.P=total dollar amount of trade=x
Let initial C.P be y
So initial profit p1=x-y
Commission earned = 2% of x = 0.02x
p2=0.02x-y
p1-p2/p1 * 100 = 20
x-y-0.02x+y/x-y * 100 = 20
0.08x/x-y =0.2
We do not know y (C.P). Hence insufficient.
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Re: Profit of the Brokerage Firm [#permalink] New post 10 Jul 2011, 10:39
enigma123 wrote:
If a brokerage firm charged a commission of 2% of the total dollar amount of a certain trade, what was the total dollar amount of that trade?

Statement 1: The dollar amount of the trade minus the brokerage firm's commission was $88000

Statement 2: The brokerage firm's commission decreased the profit earned on the trade by 20%.


Let the total amount be $x

1.
x-0.02x=88000
0.98x=88000
x=88000/0.98
Sufficient.

2.
Let the profit be P.
0.2P=0.02x
P/x=0.02/0.2=1/10
10P=x

If P=10; x=100; commission=2;
If P=20; x=200; commission=4;

We can have many such combination, each giving us a different value for x.
Not Sufficient.

Ans: "A"
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Re: Profit of the Brokerage Firm [#permalink] New post 13 Jul 2011, 05:03
enigma123 wrote:
If a brokerage firm charged a commission of 2% of the total dollar amount of a certain trade, what was the total dollar amount of that trade?

Statement 1: The dollar amount of the trade minus the brokerage firm's commission was $88000

Statement 2: The brokerage firm's commission decreased the profit earned on the trade by 20%.

[Reveal] Spoiler: My approach
Here is my approach to solve the question. I am stuck on Statement 2 which I have presented over here.

Solution:

Lets say d be the dollar amount of that trade and c be the brokerage firm's commission.
So c=0.02d

Considering statement 1 : d - c =88000

Substitute the value of c and we can find the value of d so its sufficient.

Considering Statement 2: This is where I get stuck:

Let say p be the firm's initial profit

Its decreased by 20% = p-0.20p=0.80p. After this I get lost........ Can someone please tell me if my approach is correct and how to move ahead with statement ?


like it. A is the answer
Re: Profit of the Brokerage Firm   [#permalink] 13 Jul 2011, 05:03
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