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A newly-opened retail store made $400 profit on the initial

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A newly-opened retail store made $400 profit on the initial

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Source: e-GMAT

A newly-opened retail store made $400 profit on the initial expenditure of $25,000 and then made $1,200 profit on the next $80,000 expenditure. By approximately what percent did the ratio of profit to expenditure change from the first $25,000 expenditure to the next $80,000 expenditure?

A. 6.67% decrease
B. 6.25% decrease
C. 0
D. 6.25% increase
E. 6.67% increase

The OA is B.

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BTGmoderatorLU wrote:
Source: e-GMAT

A newly-opened retail store made $400 profit on the initial expenditure of $25,000 and then made $1,200 profit on the next $80,000 expenditure. By approximately what percent did the ratio of profit to expenditure change from the first $25,000 expenditure to the next $80,000 expenditure?

A. 6.67% decrease
B. 6.25% decrease
C. 0
D. 6.25% increase
E. 6.67% increase
\[\left. \begin{gathered}
{\text{I}}{\text{.}}\,\,\,\frac{{400}}{{25000}} = \frac{2}{{125}} \hfill \\
{\text{II}}{\text{.}}\,\,\,\frac{{1200}}{{80000}} = \frac{3}{{200}} \hfill \\
\end{gathered} \right\}\,\,\,\,?\,\, = \Delta \% \left( {\,{\text{I}}\,\,\, \to \,\,\,{\text{II}}\,} \right)\]
\[? = \frac{{\frac{3}{{200}} - \frac{2}{{125}}}}{{\frac{2}{{125}}}} = \frac{{125}}{2}\left( {\frac{{3 \cdot \boxed5}}{{8 \cdot 25 \cdot \boxed5}} - \frac{{2 \cdot \boxed8}}{{5 \cdot 25 \cdot \boxed8}}} \right) = \frac{{5 \cdot 25}}{2}\left( { - \frac{1}{{5 \cdot 25 \cdot 8}}} \right) = - \frac{1}{{16}}\]
\[? = - \frac{1}{4}\left( {\frac{1}{4}} \right) = - \frac{1}{4}\left( {25\% } \right) = - 6\frac{1}{4}\% \,\,\,\,\, \Rightarrow \,\,\,\,\left( B \right)\]

This solution follows the notations and rationale taught in the GMATH method.

Regards,
Fabio.

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Fabio Skilnik :: https://GMATH.net (Math for the GMAT)
Course release PROMO : finish our test drive till 30/Nov with (at least) 50 correct answers out of 92 (12-questions Mock included) to gain a 50% discount!

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BTGmoderatorLU wrote:
Source: e-GMAT

A newly-opened retail store made $400 profit on the initial expenditure of $25,000 and then made $1,200 profit on the next $80,000 expenditure. By approximately what percent did the ratio of profit to expenditure change from the first $25,000 expenditure to the next $80,000 expenditure?

A. 6.67% decrease
B. 6.25% decrease
C. 0
D. 6.25% increase
E. 6.67% increase
The first profit-to-expenditure ratio is:

400/25000 = 4/250 = 2/125 = 16/1000

The second profit-to-expenditure ratio is:

1200/80,000 = 12/800 = 3/200 = 15/1000

So the percent change is:

(15/1000 - 16/1000)/(16/1000) x 100

-1/1000 x 1000/16 x 100 = -1/16 x 100 = -6.25 percent

The negative coefficient is indicative of a decrease; thus, the change was a 6.25 percent decrease.

Answer: B

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Scott Woodbury-Stewart Founder and CEO

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