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Math Expert V
Joined: 02 Sep 2009
Posts: 58311
Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Difficulty:   15% (low)

Question Stats: 80% (01:28) correct 20% (01:23) wrong based on 220 sessions

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Increasing the original price of a certain item by 25 percent and then increasing the new price by 25 percent is equivalent to increasing the original price by what percent?

A. 31.25
B. 37.50
C. 50.00
D. 52.50
E. 56.25

Kudos for a correct solution.

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Current Student B
Joined: 23 May 2013
Posts: 183
Location: United States
Concentration: Technology, Healthcare
GMAT 1: 760 Q49 V45 GPA: 3.5
Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Price * 1.25 * 1.25 = Price $$* \frac{5}{4}*\frac{5}{4}$$ = Price * $$\frac{25}{16}$$ = Price *(1 $$+ \frac{9}{16}$$)

$$\frac{9}{16}$$ is 1 sixteenth more than one half; one eighth is .125, so one sixteenth is .0625, so total increase is 56.25%.

Originally posted by eaze on 23 Mar 2015, 07:36.
Last edited by eaze on 23 Mar 2015, 08:08, edited 1 time in total.
Director  Joined: 07 Aug 2011
Posts: 502
Concentration: International Business, Technology
GMAT 1: 630 Q49 V27 Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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speedilly wrote:
Price * 1.25 * 1.25 = Price $$* \frac{5}{4}*\frac{5}{4}$$ = Price * $$\frac{25}{16}$$ = Price *(1 $$+ \frac{9}{16}$$)

$$\frac{9}{16}$$ is 1 sixteenth more than one half; one eighth is .125, so one sixteenth is .0625, so total increase is 56.25%.

i hope you meant to say Answer E.
Director  Joined: 07 Aug 2011
Posts: 502
Concentration: International Business, Technology
GMAT 1: 630 Q49 V27 Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Bunuel wrote:
Increasing the original price of a certain item by 25 percent and then increasing the new price by 25 percent is equivalent to increasing the original price by what percent?

A. 31.25
B. 37.50
C. 50.00
D. 52.50
E. 56.25

Kudos for a correct solution.

X*1.25*1.25 = 1.5625 X
so there is a net increase of 56.25% . Answer E.
Current Student B
Joined: 23 May 2013
Posts: 183
Location: United States
Concentration: Technology, Healthcare
GMAT 1: 760 Q49 V45 GPA: 3.5
Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Lucky2783 wrote:
speedilly wrote:
Price * 1.25 * 1.25 = Price $$* \frac{5}{4}*\frac{5}{4}$$ = Price * $$\frac{25}{16}$$ = Price *(1 $$+ \frac{9}{16}$$)

$$\frac{9}{16}$$ is 1 sixteenth more than one half; one eighth is .125, so one sixteenth is .0625, so total increase is 56.25%.

i hope you meant to say Answer E.

I did! Whoops. Thanks for the correction!
EMPOWERgmat Instructor V
Status: GMAT Assassin/Co-Founder
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GMAT 1: 800 Q51 V49 GRE 1: Q170 V170 Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Hi All,

The math behind this prompt can be done in a number of different ways (using fractions, decimals or ratios). The prompt is perfect for TESTing VALUES.

We're told that the original price of an item is increased by 25% and then THAT price is increased by 25%....

IF....
Starting value = $100 + 25% = 100 + .25(100) = 125 + 25% = 125 + .25(125) = 125 + 31.25 = 156.25 The question asks how the final price relates to the original price. This is essentially about Percentage Change, which means we should use the Percentage Change Formula: Percentage Change = (New - Old)/Old = Difference/Original Doing either calculation will yield the same result: 56.25/100 = 56.25% Final Answer: GMAT assassins aren't born, they're made, Rich _________________ Manager  B Joined: 06 Jan 2014 Posts: 52 Re: Increasing the original price of a certain item by 25 percent and then [#permalink] Show Tags 1 Let Orignal Cost be 100 First Increase = 100 *1.25 = 125 Second Increase = 125 * 1.25 = 156.25 Total Increase = 56.25 Ans : E _________________ ______________________________ Liked the Post !!!! KUDOs Plzzzzz SVP  Status: The Best Or Nothing Joined: 27 Dec 2012 Posts: 1751 Location: India Concentration: General Management, Technology WE: Information Technology (Computer Software) Re: Increasing the original price of a certain item by 25 percent and then [#permalink] Show Tags 3 Answer = E. 56.25 For initial price of 100, twice the hike of 25% means $$(100+25) * \frac{125}{100} = 156.25$$ Hike = 156.25 - 100 = 56.25 _________________ Kindly press "+1 Kudos" to appreciate Math Expert V Joined: 02 Sep 2009 Posts: 58311 Re: Increasing the original price of a certain item by 25 percent and then [#permalink] Show Tags Bunuel wrote: Increasing the original price of a certain item by 25 percent and then increasing the new price by 25 percent is equivalent to increasing the original price by what percent? A. 31.25 B. 37.50 C. 50.00 D. 52.50 E. 56.25 Kudos for a correct solution. MAGOOSH OFFICIAL SOLUTION: Attachment: increasefollowedbyincrease_text.PNG [ 19.7 KiB | Viewed 5242 times ] _________________ SVP  B Joined: 06 Nov 2014 Posts: 1873 Re: Increasing the original price of a certain item by 25 percent and then [#permalink] Show Tags Bunuel wrote: Increasing the original price of a certain item by 25 percent and then increasing the new price by 25 percent is equivalent to increasing the original price by what percent? A. 31.25 B. 37.50 C. 50.00 D. 52.50 E. 56.25 Kudos for a correct solution. Let original price = 100. Increase by 25% = 125 Increase by 25% again = 125 * 1.25 = 156.25 This is 56.25 more than original price. -- Optimus Prep's GMAT On Demand course for only$299 covers all verbal and quant. concepts in detail. Visit the following link to get your 7 days free trial account: http://www.optimus-prep.com/gmat-on-demand-course
Manager  Joined: 18 Dec 2014
Posts: 99
Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Picked an easy number.

100*1,25 = 125
125*1,25 = 156,25
156,25 - 100 = 56,25
Intern  B
Joined: 17 Feb 2016
Posts: 1
Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Hi,

Could someone please tell me if we can use the Net change formula a+b+(ab/100)

Thanks!!
Manager  S
Joined: 25 Mar 2013
Posts: 226
Location: United States
Concentration: Entrepreneurship, Marketing
GPA: 3.5
Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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Original = 100
New1 = 100 ( 1.25 ) = 125
New2 = 125(1.25) = 156.25
$$\frac{Change}{Original} = \frac{Percent}{100}$$
E
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Re: Increasing the original price of a certain item by 25 percent and then  [#permalink]

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_________________ Re: Increasing the original price of a certain item by 25 percent and then   [#permalink] 04 Mar 2018, 04:36
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