The following tables show the revenues and costs, in thousands of

Question

The following tables show the revenues and costs, in thousands of dollars, for a small company in the year 2007

Profit = Revenue – Costs. If costs remain constant from 2007 to 2008, and if revenues increase by 10% in that same period, by what percent will profits increase from 2007 to 2008?

A. 11.6%
B. 25.8%
C. 34.7%
D. 71.2%
E. 116.3%

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Official Answer

C

Sasindran · Answer

C

For 2007 profit=1052-749 =303

For 2008 profit = 1.1*1052 -749
= 1157.2- 749 =408.2

Now % increase in profit = ((408.2-303)/303)*100
= (105.2/303)*100
= 34.7%

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Abhishek009 · Answer

Revenue for 2008 = 1157.2
Cost for 2008 = 749

Profit for 2008 = 408.2
Profit for 2007 = 303

Percentage Increase in profit is 34.72 %, Answer will be (C)

generis · Answer

The numbers are unwieldy, and answers are far apart. Round. 
Let original costs = $750
Let original revenue = $1,050

Original profit (Revenues -Costs): 
$1,050 - $750 = $300

NEW revenues
Revenues increase 10 percent:
1.1 =   1\frac{1}{10} =\frac{11}{10} 
 $1,050 * \frac{11}{10} = 11*105 = $1,155

NEW profit: 
$1,155 - $750 = $405   \approx{$400}

PERCENT INCREASE in profits?

Percent change:  \frac{New-Old}{Old}*100

\frac{400-300}{300}*100=\frac{100}{300}*100=\frac{1}{3}*100 =.33*100 
 \approx{33}   percent

The answer will be slightly higher than 33 percent because I rounded new profit down.

Only one answer is close: 34.7% percent

Answer C

EMPOWERgmatRichC · Answer

Hi All,

We're told that Profit = Revenue - Costs and that costs will remain constant from 2007 to 2008, while revenues INCREASE by 10% in that same period. We're asked for the percent increase in PROFITS from 2007 to 2008. This question comes down to some Arithmetic and the Percentage Change Formula. In addition, since the answer choices are sufficiently 'spread out', we can use estimation to save some calculation time...

Profit in 2007 = (Revenue in 2007) - (Costs in 2007) = 1052 - 749 = an estimate of 1050 - 750 = 300

We're told that, in 2008, Revenue will INCREASE by 10% while Costs will stay the same...

Profit in 2008 = (Revenue in 2008) - (Costs in 2008) = 
(1.1)(1050) - 750 = 
1155 - 750 = 
405

Percentage Change = (New - Old)/(Old) = (Difference)/(Original) = (405 - 300)/(300) = 105/300 = a little more than 1/3 = a little more than 33%

Final Answer:  C

GMAT assassins aren't born, they're made, 
Rich

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