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100 points for $49 worth of Veritas practice GMATs FREE VERITAS PRACTICE GMAT EXAMS Earn 10 Points Per Post Earn 10 Points Per Thanks Earn 10 Points Per Upvote ## A real estate investment firm began the year with 80% of its ##### This topic has 2 expert replies and 2 member replies ### Top Member ## A real estate investment firm began the year with 80% of its ## Timer 00:00 ## Your Answer A B C D E ## Global Stats Difficult A real estate investment firm began the year with 80% of its investments in commercial real estate and 20% in residential real estate. Over the course of the year, the total value of its investments increased by 3.5%, with the value of its commercial real estate holdings growing by 7%. This means that the value of its residential real estate holdings: A. Did not change B. Decreased by 14% C. Decreased by 10.5% D. Decreased by 3.5% E. Increased by 1.5% OA C Source: Veritas Prep ### GMAT/MBA Expert GMAT Instructor Joined 25 May 2010 Posted: 15387 messages Followed by: 1872 members Upvotes: 13060 GMAT Score: 790 Top Reply BTGmoderatorDC wrote: A real estate investment firm began the year with 80% of its investments in commercial real estate and 20% in residential real estate. Over the course of the year, the total value of its investments increased by 3.5%, with the value of its commercial real estate holdings growing by 7%. This means that the value of its residential real estate holdings: A. Did not change B. Decreased by 14% C. Decreased by 10.5% D. Decreased by 3.5% E. Increased by 1.5% Let the total investment =$1000, implying that commercial holdings = 80% of 1000 = $800 and that residential holdings = 1000-800 =$200.

Since the total $1000 investment grows by 3.5%, the total growth = 3.5% of 1000 =$35.
Since the $800 in commercial holdings grows by 7%, the growth in commercial holdings = 7% of 800 =$56.

Change for residential holdings = (total growth) - (commercial growth) = 35-56 = -$21. Since the$200 in residential holdings suffers a $21 loss, we get: Percent decrease = decrease/original * 100 = 21/200 * 100 = 10.5%. The correct answer is C. _________________ Mitch Hunt Private Tutor for the GMAT and GRE GMATGuruNY@gmail.com If you find one of my posts helpful, please take a moment to click on the "UPVOTE" icon. Available for tutoring in NYC and long-distance. For more information, please email me at GMATGuruNY@gmail.com. Student Review #1 Student Review #2 Student Review #3 Free GMAT Practice Test How can you improve your test score if you don't know your baseline score? Take a free online practice exam. Get started on achieving your dream score today! Sign up now. ### Top Member Legendary Member Joined 02 Mar 2018 Posted: 1184 messages Followed by: 2 members Top Reply Let overall investment = 100 % Investment increase by 3.5% Investment = 100 + 3.5 = 103.5% Commercial Investment = 80 % Commercial Investment increase by 7% 7% of 80 = 5.6 Residential real estate = 20% Changes in Residential real Estate = 3.5 - 5.6 = -2.1 $$-\frac{2.1}{20\%}=-0.105\%$$ Since the % change is negative, then the value of investment in residential real estate decreased by 10.5. $$Answer\ is\ Option\ C$$ ### GMAT/MBA Expert GMAT Instructor Joined 25 Apr 2015 Posted: 2950 messages Followed by: 19 members Upvotes: 43 BTGmoderatorDC wrote: A real estate investment firm began the year with 80% of its investments in commercial real estate and 20% in residential real estate. Over the course of the year, the total value of its investments increased by 3.5%, with the value of its commercial real estate holdings growing by 7%. This means that the value of its residential real estate holdings: A. Did not change B. Decreased by 14% C. Decreased by 10.5% D. Decreased by 3.5% E. Increased by 1.5% OA C Source: Veritas Prep We are given that a real estate investment firm began the year with 80% of its investments in commercial real estate and 20% in residential real estate. If we let the total investments = 1000, then 0.8 x 1000 = 800 = commercial real estate and 0.2 x 1000 = 200 = residential real estate. We are also given that the total investments increased by 3.5% and that commercial real estate investments increased by 7%. We need to determine the change in percentage for residential real estate investments. We can let n be the change in percentage and create the following equation: 1.07(800) + (1+n/100)(200) = 1.035(1000) 856 + 200 + 2n = 1035 1056 + 2n = 1035 2n = -21 n = -10.5 Since n is negative, the value of investments in residential real estate decreased by 10.5 percent. Answer: C _________________ Scott Woodbury-Stewart Founder and CEO scott@targettestprep.com See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews ### Top Member Legendary Member Joined 29 Oct 2017 Posted: 1018 messages Followed by: 4 members $$80+20=100$$ In a year $$80\cdot 1,07 + ? =100\cdot 3,5$$ cca. $$86 + ? = 103,5$$ $$?=17,5$$ $$\frac{17,5-20}{20}= -\frac{2,5}{20} \Rightarrow$$ cca $$12\% < 14\% \Rightarrow$$ __C__ • Get 300+ Practice Questions 25 Video lessons and 6 Webinars for FREE Available with Beat the GMAT members only code • Magoosh Study with Magoosh GMAT prep Available with Beat the GMAT members only code • Free Trial & Practice Exam BEAT THE GMAT EXCLUSIVE Available with Beat the GMAT members only code • Free Veritas GMAT Class Experience Lesson 1 Live Free Available with Beat the GMAT members only code • FREE GMAT Exam Know how you'd score today for$0

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