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

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Math Expert
Joined: 02 Sep 2009
Posts: 51100
Company R's annual profit has increased by a constant amount each cale  [#permalink]

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26 Jun 2018, 05:19
00:00

Difficulty:

65% (hard)

Question Stats:

44% (01:09) correct 56% (01:06) wrong based on 33 sessions

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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. _________________ PS Forum Moderator Joined: 25 Feb 2013 Posts: 1217 Location: India GPA: 3.82 Company R's annual profit has increased by a constant amount each cale [#permalink] ### Show Tags 26 Jun 2018, 07:26 Bunuel wrote: 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.

As the AMOUNT of profit increases every year hence the Total Profit is Compounded.

Let $$p$$ be the profit in 1985. Time period $$=1991-1985=16$$ years. Let $$r$$ be the growth rate.

Hence Profit in 1991 $$= p*(1+\frac{r}{100})^{16}$$

we need the value of $$p$$ & $$(1+\frac{r}{100})$$

Statement 1: implies $$p=212,000$$

Profit in 1989 i.e $$4$$ years since 1985 will be $$=p*(1+\frac{r}{100})^4=242000$$

$$=>(1+\frac{r}{100})^4=\frac{242000}{212000}=\frac{121}{106}$$. Now raise both sides to the power $$4$$ to get,

Hence $$(1+\frac{r}{100})^{16}=(\frac{121}{106})^4$$

This statement gives all the required values. Sufficient

Statement 2: we know the increase in profit but we do not know the profit amount. hence $$p$$ & $$r$$ cannot be calculated. Insufficient

Option A
Manager
Joined: 23 Nov 2017
Posts: 58
Location: India
GMAT 1: 720 Q51 V36
Re: Company R's annual profit has increased by a constant amount each cale  [#permalink]

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27 Jun 2018, 03:28
Bunuel wrote:
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. Question stem: Company R's annual profit has increased by a constant amount each calendar year since 1985 It means that the profit in each subsequent year since 1985 is in an AP. Statement 1:In 1985 Company R's annual profit was$212,000; in 1989 Company R's annual profit was $242,000 We can compute the common difference of the progression and add two more such common differences to compute the value for 1991. We will get a unique answer. That will suffice. We need not compute the value as it is a DS question. However, this is the value. The annual increase in profit = (profit in 1989 - profit in 1985)/4 = (242,000 - 212,000)/4 = 7500. So, profit in 1991 = Profit in 1989 + 2 * common difference = 242,000 + 2*7500 =$257,000

Statement 1 is sufficient.

Statement 2: Company R's annual profit has increased by $7,500 each year since 1985 We do not know the profit in 1985 or any of the years between 1985 and 1991 to find the answer. Statement 2 is NOT sufficient. Choice A. _________________ An IIM C Alumnus - Class of '94 GMAT Tutor at Wizako GMAT Classes & Online Courses Senior Manager Joined: 29 Dec 2017 Posts: 385 Location: United States Concentration: Marketing, Technology GMAT 1: 630 Q44 V33 GMAT 2: 690 Q47 V37 GMAT 3: 710 Q50 V37 GPA: 3.25 WE: Marketing (Telecommunications) Re: Company R's annual profit has increased by a constant amount each cale [#permalink] ### Show Tags 27 Jun 2018, 05:06 Company R's annual profit has increased by a constant amount each calendar year since 1985 - arithmetic progression. If profit in 1985 = a(1), then every profit (on 7th year) in 1991 a(7)= a(1)+(7-1)*K =a(1)+6K=? (1) In 1985 Company R's annual profit was$212,000; in 1989 Company R's annual profit was $242,000. a(1)=$212,000 and a(5)=$242,000 - from this point you may stop calculations because when we know two numbers of arithmetic progression, we can find any other number. Suff (2) Company R's annual profit has increased by$7,500 each year since 1985

K=\$7,500 and we need to find a(7)=a(1)+6K - clearly Not Suff because we don't know starting ammount.

Re: Company R's annual profit has increased by a constant amount each cale &nbs [#permalink] 27 Jun 2018, 05:06
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