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Schools: LBS MIF '15
Posts: 16
Updated on: 14 Oct 2013, 05:55
Originally posted by bulletpoint on 14 Oct 2013, 05:24.
Last edited by Bunuel on 14 Oct 2013, 05:55, edited 1 time in total.
Last edited by Bunuel on 14 Oct 2013, 05:55, edited 1 time in total.
Moved to PS forum.
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Stores X, Y, and Z each sell a certain item that has a given list price. Stores X and Y are located in a state with a 5 percent sales tax, and both sell the item at a 5 percent discount off list price, while Store Z is located in a state with no sales tax and gives no discounts. Store X applies its discounts first and then charges sales tax on the discounted price, while Store Y adds the tax first and then applies the discount to the price with tax. If x and y are the prices, with tax and discount, charged by Stores X and Y, respectively, and z is the price charged by Store Z, which of the following statements correctly describes the relationship among x, y, and z?
A. x=y=z
B. x=y<z
C. x<y<z
D. x<z<y
E. y<z<x
A. x=y=z
B. x=y<z
C. x<y<z
D. x<z<y
E. y<z<x
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bulletpoint
Say the price of the item is 100. Then:
x = (100*0.95)*1.05 < 100.
y = (100*1.05)*0.95 < 100.
z = 100.
So, we have that x=y<z.
Answer: B.
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joseph0alexander
Yes, increasing a quantity by x% and then decreasing the result by y% is the same as decreasing by y% and then increasing the result by x%:
\([p*(1 + \frac{x}{100})]*(1 - \frac{y}{100}) = [p*(1 -\frac{y}{100})]*(1 + \frac{x}{100})\)
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General Discussion
Hi Bunuel,
I tried this on a spreadsheet. I took a common number (100) and did 2 sets of operations for 2 options:
option 1 (Store Y) added X% and subtracted Y% from the result of the first operation
option 2 (Store X) subtracted Y% and added X% from the result of the first operation
Capture.PNG [ 1.74 KiB | Viewed 98786 times ]
I always got the same answer. Is this a property that we can by heart?
I tried this on a spreadsheet. I took a common number (100) and did 2 sets of operations for 2 options:
option 1 (Store Y) added X% and subtracted Y% from the result of the first operation
option 2 (Store X) subtracted Y% and added X% from the result of the first operation
Attachment:
Capture.PNG [ 1.74 KiB | Viewed 98786 times ]
Posts: 1
Bunuel Can you please explain if this is correct - If we used the formula instead of successive discounts ie A + B + AB/100 (where A and B are successive discounts/percentages applied to the same quantity) then the ans for final list price value is:
X: (-5) + 5 -25/100 (X) => X is the list price
Y: 5 - 5 -25/100 (Y) => Y is the list price
But seems like the final list price value is different using this formula. Is it incorrect to use it here?
X: (-5) + 5 -25/100 (X) => X is the list price
Y: 5 - 5 -25/100 (Y) => Y is the list price
But seems like the final list price value is different using this formula. Is it incorrect to use it here?
Hi Bunnel,
I tried solving this question by taking the value of the product as 100. A 5% decrease results 95 (discounted price) after we add the tax to this value it is equal to 99.3. If the sales tax is added and then discounted its 101.5. Can you please explain what am i missing here ?
I tried solving this question by taking the value of the product as 100. A 5% decrease results 95 (discounted price) after we add the tax to this value it is equal to 99.3. If the sales tax is added and then discounted its 101.5. Can you please explain what am i missing here ?
nikitamitra
Yes, using the formula also we will get the same result. Note that List price of the product is same. So, Try taking the value of each product 'a' and then substutitute in your formula. You will get the result.
anuj11
You are making a calculation mistake.
List price 100.
Case 1 : 5% increase then 5% discount. = 105 * 0.95
Case 2 : 5% discount the n 5% increase = 95 *1.05
Both will be equal.
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Bunuel
Hi, I understand that Y<Z, but could you please explain why X equals to Y<Z?
Posts: 1,142
nielsenn
Hi
x=y<z simply means that x and y are equal to each other, and both are less than z.
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Expert reply
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bulletpoint
We are given that Stores X and Y are located in a state with a 5 percent sales tax, and both sell an item at a 5 percent discount off list price, while Store Z is located in a state with no sales tax and gives no discounts.
We are also given that Store X applies its discounts first and then charges sales tax on the discounted price, while Store Y adds the tax first and then applies the discount to the price with tax.
Let’s determine the prices, x, y, and z and let the original price of the item = 100.
Price at Store X:
(100)(0.95)(1.05) = $99.75
Price at Store Y:
(100)(1.05)(0.95) = $99.75
Price at Store Z:
$100
Thus, x = y < z
Answer: B
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Hi
Cant we use the %change formula = x + y + (xy/100) to calculate two successive % change instead of calculating the discount and tax seperately??
Posted from my mobile device
Cant we use the %change formula = x + y + (xy/100) to calculate two successive % change instead of calculating the discount and tax seperately??
Posted from my mobile device
Posts: 1,142
RashmiT
Hi
Yes we can do that. Discount of 5% would mean -5% change, while tax of 5% would mean +5% change.
So, for Store X, it would be = -5 + 5 + (-5)*5/100 = - 2.5% change overall
and for Store Y, it would be = +5 -5 + 5*(-5)/100 = -2.5% change overall
So the final values for Stores X and Y would be same
While this questions is straight, I made a very silly mistake, in a hurry missed that, for y discount is applied to (List Price + Sales Tax), I still feel there is some contradiction in the question stem.
Stem says -
1. Stores X, Y, and Z each sell a certain item that has a given list price.
2. X&Y give 5 percent discount off list price.
Now this List Price is a given price for ALL X, Y & Z.
This clearly means that if LP is a given value (say 100), the Value of Discount on LP is
5% LP in X & Y (=$5), and $0 in Z.
In such a case, The S.Ps of all are
X: (100 - 5)*1.05 = $99.75
Y: (100*1.05)- (5% of LP) = 105 - 5 = $100
Z: $100
So, x < y = z
Of course this is incorrect given the OA, but I strongly feel there is some contradiction (though minimal) in the question stem. Is it that I am thinking too much or missing something here?
Perhaps the question shouldn't have mentioned off list price for the Discount Applied by X and Y.
Stem says -
1. Stores X, Y, and Z each sell a certain item that has a given list price.
2. X&Y give 5 percent discount off list price.
Now this List Price is a given price for ALL X, Y & Z.
This clearly means that if LP is a given value (say 100), the Value of Discount on LP is
5% LP in X & Y (=$5), and $0 in Z.
In such a case, The S.Ps of all are
X: (100 - 5)*1.05 = $99.75
Y: (100*1.05)- (5% of LP) = 105 - 5 = $100
Z: $100
So, x < y = z
Of course this is incorrect given the OA, but I strongly feel there is some contradiction (though minimal) in the question stem. Is it that I am thinking too much or missing something here?
Perhaps the question shouldn't have mentioned off list price for the Discount Applied by X and Y.
NAvinash
Joined: 06 Jun 2018
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NAvinash
Hi it is given a certain item that has a list price..
This points to same item and same price..
Otherwise it would a certain item that has a list price for each place/that has a different list price or something to that effect
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bulletpoint
Let $100 = the list price for all 3 stores
Store X
$100 plus 5% sales tax = $105
$105 minus 5% discount = (0.95)($105) = $99.75
Aside: a 5% discount means the buyer is paying 95% of the cost (thus 95% of $105)
Store Y
$100 minus 5% discount = $95
$95 plus 5% sales tax = (1.05)($95) = $99.75
Store Z
$100
We can see that $99.75 = $99.75 < $100
In other words, x = y < z
Answer: B
Cheers,
Brent
TheNightKing
Joined: 18 Dec 2017
Last visit: 20 Mar 2024
Posts: 1,119
Location: United States (KS)
GMAT 1: 600 Q46 V27
GMAT 1: 600 Q46 V27
Posts: 1,119
bulletpoint
This question is literally a 500 level question. But the way GMAC words it makes it a 600-700 level question. This is absolute brilliance.
If you are comfortable with percentages then you know the sequence does not matter. 5% increase followed by 5% decrease or the other way round will give the exact same result. You can try it.
B is the perfect choice.
Glad I got it right during the test. !
bulletpoint
Lets say each store sells an item for $100.
Z stays as is. Z = 100
X is discounted 5% and then charged 5% sales tax. Y is charged 5% sales tax and discounted by 5%.
X = 100 * 0.95 * 1.05
Y = 100 * 1.05 * 0.95
Therefore X = Y.
99.75 = 99.75 < 100
Answer is B.
Posts: 202
Hi Bunuel
I was little bit confused while solving the problem by the language of the problem. It is written " both sell the item at a 5 percent discount off list price " and for Y it is also written " while Store Y adds the tax first and then applies the discount to the price with tax ". I got confused whether the discount is on the list price or on the price with tax.
I was little bit confused while solving the problem by the language of the problem. It is written " both sell the item at a 5 percent discount off list price " and for Y it is also written " while Store Y adds the tax first and then applies the discount to the price with tax ". I got confused whether the discount is on the list price or on the price with tax.
Bunuel
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