Last visit was: 25 Apr 2026, 11:26 It is currently 25 Apr 2026, 11:26
Home
Messages
Tests
Schools
Events
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel
Back to Forum
Create Topic
555-605 (Medium)|   Word Problems|         
User avatar
Bunuel
User avatar
Math Expert
Joined: 02 Sep 2009
Last visit: 25 Apr 2026
Posts: 109,830
Own Kudos:
811,243
 [17]
Given Kudos: 105,884
Products:
GMAT Club Tests Forum Quiz
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
Posts: 109,830
Kudos: 811,243
 [17]
Company R's annual profit has increased by a constant amount each cale 26 Jun 2018, 06:19
1
Kudos
Add Kudos
16
Bookmarks
Bookmark this Post
00:00
Start Timer
Pause Timer
Resume Timer
Show Answer
Hide
Show
History
A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

Difficulty:

35% (medium)

Question Stats:

64% (01:09) correct 36% (01:11) wrong based on 684 sessions

History

Date
Time
Result
Not Attempted Yet
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.
ShowHide Answer
Official Answer
A
Need more similar questions? Run a 5 to 10 question quiz in GMAT Club Forum Quiz →
User avatar
niks18
User avatar
Retired Moderator
Joined: 25 Feb 2013
Last visit: 30 Jun 2021
Posts: 862
Own Kudos:
1,805
Given Kudos: 54
Location: India
GPA: 3.82
Products:
My Reviews
Posts: 862
Kudos: 1,805
Company R's annual profit has increased by a constant amount each cale Updated on: 24 May 2021, 21:58
Originally posted by niks18 on 26 Jun 2018, 08:26.
Last edited by niks18 on 24 May 2021, 21:58, edited 1 time in total.
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Bunuel
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.
Show more

As the profit increases every year by a fixed amount, the profit can be analysed through AP series.

Let \(p\) be the profit in 1985. Time period \(n=1991-1985=16\) years. Let \(d\) be the common difference.

Hence Profit in 1991 \(= p + (n-1)d = p + (16-1)d\)

we need the value of \(p\) & \(d\)

Statement 1: implies \(p=212,000\)

Profit in 1989 i.e \(4\) years since 1985 will be \(=212000 + (4-1)d=242000\).

From this statement, we get the value of \(p & d\).

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 \(p\) & \(d\) cannot be calculated. Insufficient

Option A
User avatar
WizakoBaskar
User avatar
Joined: 24 Nov 2017
Last visit: 23 Dec 2023
Posts: 70
Own Kudos:
254
 [1]
Given Kudos: 1
Location: India
GMAT 1: 720 Q51 V36
GMAT 1: 720 Q51 V36
Posts: 70
Kudos: 254
 [1]
Company R's annual profit has increased by a constant amount each cale 27 Jun 2018, 04:28
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Bunuel
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.
Show more

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.
User avatar
Hero8888
User avatar
Joined: 29 Dec 2017
Last visit: 14 Apr 2019
Posts: 299
Own Kudos:
348
Given Kudos: 273
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)
GMAT 3: 710 Q50 V37
Posts: 299
Kudos: 348
Company R's annual profit has increased by a constant amount each cale 27 Jun 2018, 06:06
Kudos
Add Kudos
Bookmarks
Bookmark this Post
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.

Answer (A)
User avatar
tanya0630
User avatar
Joined: 16 May 2020
Last visit: 22 Jul 2021
Posts: 8
Own Kudos:
8
Given Kudos: 29
Location: India
Concentration: Strategy, Technology
GPA: 4
WE:Information Technology (Retail Banking)
Posts: 8
Kudos: 8
Company R's annual profit has increased by a constant amount each cale 01 Apr 2021, 23:36
Kudos
Add Kudos
Bookmarks
Bookmark this Post
niks18
Bunuel
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
Show more


May I know the thought behind using compound interest to calculate the amount when it clearly says that the profit has increased by a constant amount each year?
User avatar
niks18
User avatar
Retired Moderator
Joined: 25 Feb 2013
Last visit: 30 Jun 2021
Posts: 862
Own Kudos:
1,805
Given Kudos: 54
Location: India
GPA: 3.82
Products:
My Reviews
Posts: 862
Kudos: 1,805
Company R's annual profit has increased by a constant amount each cale 24 May 2021, 22:00
Kudos
Add Kudos
Bookmarks
Bookmark this Post
tanya0630
niks18
Bunuel
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


May I know the thought behind using compound interest to calculate the amount when it clearly says that the profit has increased by a constant amount each year?
Show more

Hi tanya0630

Apologies for the late reply. My previous solution was incorrect and hence I have edited the solution. It seems I had mistaken the profit increase with growth in profit.
I hope your doubt is clear now.

Thanks
User avatar
bumpbot
User avatar
Non-Human User
Joined: 09 Sep 2013
Last visit: 04 Jan 2021
Posts: 38,985
Own Kudos:
1,118
Posts: 38,985
Kudos: 1,118
Company R's annual profit has increased by a constant amount each cale 30 Jul 2024, 00:24
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Automated notice from GMAT Club BumpBot:

A member just gave Kudos to this thread, showing it’s still useful. I’ve bumped it to the top so more people can benefit. Feel free to add your own questions or solutions.

This post was generated automatically.
Moderators:
Bunuel
Math Expert
109829 posts
kingbucky
498 posts
Gmat860sanskar
212 posts