Annual salary

alex.gellatly wrote:In 1994, Kenneth's annual salary was 30 percent higher than it was in 1993. In 1995, Kenneth's annual salary was reduced to 104 percent of his 1993 annual salary. Kenneth's 1995 annual salary was what percent less than his 1994 salary?

Say, annual salary in 1993 = 100
Hence, annual salary in 1994 = 130
And, annual salary in 1995 = 104

Hence, required percentage = 100*(130 - 104)/130 = 100*26/130 = 20

The correct answer is B.

alex.gellatly wrote:No where in the question does it ask for precentage change. That is why I got ans. D (130-104). How do we know it is asking for percentage change?

Because the question is asking "Kenneth's 1995 annual salary was what percent less than his 1994 salary? "

alex.gellatly wrote: ↑

Thu Jun 28, 2012 9:24 pm

In 1994, Kenneth's annual salary was 30 percent higher than it was in 1993. In 1995, Kenneth's annual salary was reduced to 104 percent of his 1993 annual salary. Kenneth's 1995 annual salary was what percent less than his 1994 salary?

A. 16%
B. 20%
C. 24%
D. 26%
E. 28%

Solution:

If the salary in 1993 was n, then the salary in 1994 was 1.3n, and in 1995 1.04n, thus:

(1.30n - 1.04n) / 1.30n x 100

0.26 / 1.30 x 100 = 0.2 x 100 = 20%

Alternate Solution:

Assume that Kenneth’s salary in 1993 was $100. Then, in 1994, it was 100 x 1.3 = $130, and in 1995 it was 100 x 1.04 = $104.

We use the percent less than formula to obtain:

(104 - 130) / 130 x 100

-26/130 x 100

-26/13 x 10

-2 x 10 = -20%, which indicates 20% less.

Answer: B