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In each of the last five years, Company K donated

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jjjinapinch Senior | Next Rank: 100 Posts Default Avatar
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In each of the last five years, Company K donated

Post Thu Jul 27, 2017 12:19 pm
In each of the last five years, Company K donated p percent of its annual profits to a certain scholarship fund. Did Company K donate more than $10,000 to the scholarship fund last year?

(1) Two years ago, Company K had annual profits of $3 million and donated $15,000 to the scholarship fund
(2) Last year, Company K had annual profits of $2.5 million

Official Guide question
Answer: C

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Post Fri Dec 08, 2017 7:07 am
jjjinapinch wrote:
In each of the last five years, Company K donated p percent of its annual profits to a certain scholarship fund. Did Company K donate more than $10,000 to the scholarship fund last year?

(1) Two years ago, Company K had annual profits of $3 million and donated $15,000 to the scholarship fund
(2) Last year, Company K had annual profits of $2.5 million
We are given that in each of the last five years, Company K donated p percent of its annual profits to a certain scholarship fund. We need to determine whether company K donated more than 10,000 dollars to the scholarship fund last year.

Statement One Alone:

Two years ago, Company K had annual profits of $3 million and donated $15,000 to the scholarship fund.

Using the information in statement one, we can determine a value for p.

3,000,000(p/100) = 15,000

3,000,000p = 1,500,000

p = 0.5

Thus, in each of the last 5 years, company K donated 0.5% of its profits. However, since we don’t know the profit made last year, we can’t answer the question. Statement one alone is not sufficient. We can eliminate answer choices A and D.

Statement Two Alone:

Last year, Company K had annual profits of $2.5 million.

Since we do not have a value for p, statement two alone is not sufficient to answer the question. We can eliminate answer choice B.

Statements One and Two Together:

Using the information in statements one and two, we can determine that last year company K donated 0.5 percent of their 2.5 million dollar profit, or $12,500, which is more than $10,000. The two statements together are sufficient.

Answer: C

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Scott Woodbury-Stewart Founder and CEO

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GMAT/MBA Expert

Post Thu Jul 27, 2017 12:32 pm
Hi jjjinapinch,

We can actually answer this question in a couple of different ways (depending on the information that we're given to work with). We're told that the Company donates P percent of its profits each year to a certain scholarship. Thus, to determine whether that Company donated more than $10,000 to the scholarship LAST year, we will likely need to know the Company's profits last year AND the value of P. This is a YES/NO question.

1) Two years ago, Company K had annual profits of $3 million and donated $15,000 to the scholarship fund

This Fact gives us information about TWO YEARS AGO, not last year, so it's clearly not enough information to answer the given question. However, we CAN determine the value of P (we don't technically have to do that math right now - or at all, really - but if you wanted to, you could determine....

P = 15,000/3,000,000 = 15/3,000 = 1/200 = 0.5%

Fact 1 is INSUFFICIENT

2) Last year, Company K had annual profits of $2.5 million.

Fact 2 gives us the profits from LAST year, but not the value of P.
Fact 2 is INSUFFICIENT

Combined, we know...
-Last year's profits ($2.5 million)
-The value of P (even if we didn't calculate it, we know that we COULD calculate it).

Thus, we CAN answer the question - and regardless of whether the answer is YES or NO, there will be just one definitive answer.
Combined, SUFFICIENT

Final Answer: C

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

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Contact Rich at Rich.C@empowergmat.com

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