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Last year the price per share of Stock X increased by k

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Manager
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Last year the price per share of Stock X increased by k [#permalink]

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New post 01 Oct 2008, 00:45
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This topic is locked. If you want to discuss this question please re-post it in the respective forum.

Last year the price per share of Stock X increased by k percent and the earnings per share
of Stock X increased by m percent, where k is greater than m. By what percent did the
ratio of price per share to earnings per share increase, in terms of k and m?
A. k/m %
B. (k-m) %
C. [100(k-m)]/(100+k) %
D. [100(k-m)]/(100+m) %
E. [100(k-m)]/(100+k+m) %
Manager
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Joined: 30 Sep 2008
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Re: GMAT SET 16 - 3 [#permalink]

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New post 01 Oct 2008, 01:19
% increased = [(100+k)/(100+m) - 1] x 100 %

So the answer is D
Intern
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Posts: 36
Re: GMAT SET 16 - 3 [#permalink]

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New post 01 Oct 2008, 09:32
Hello. Can someone please write out how that answer was found? I have tried to compute it a couple times and come up with 100+K. Thank you
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WE 1: Investment Banking - 6yrs
Re: GMAT SET 16 - 3 [#permalink]

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New post 01 Oct 2008, 09:45
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You can refer : 7-t70360
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Re: GMAT SET 16 - 3 [#permalink]

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New post 01 Oct 2008, 10:15
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lylya4 wrote:
% increased = [(100+k)/(100+m) - 1] x 100 %

So the answer is D

Let original price/share = p & earning/share = e.
Original Ratio = p/e

New price/share = p+(k/100)p = (100p+kp)/100
New earning/share = e+(m/100)e = (100e+me)/100
New ratio = (100p+kp)/(100e+me)

Increase in ratio: (100p+kp)/(100e+me)-(p/e)

% increase = [(100p+kp)/(100e+me)-(p/e)]/(p/e) * 100... increase/original*100
= [(100+k-100-m)/100+m]*100
= 100(k-m)/(100+m)
Answer is D.
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Re: GMAT SET 16 - 3 [#permalink]

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New post 01 Oct 2008, 15:31
Thank you jatinrai.

I was doing it right but kept making the same a silly algebraic mistake in the second to last step. Plus, I can never read my handwriting. Thank you! :-D
Re: GMAT SET 16 - 3   [#permalink] 01 Oct 2008, 15:31
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