Net Percentage Increase

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by [email protected] » Fri Jul 11, 2014 6:08 am

Am I wrong in assuming 100 at the start of the first year 50% increase will be 150 in the second year and again 50% increase in the third year making it 225? So the net increase will be
((225-100)/100)*100

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Source: Beat The GMAT — Problem Solving | Fri Jul 11, 2014 6:08 am

mcdesty: Master | Next Rank: 500 Posts; Posts: 116; Joined: Wed Mar 14, 2012 1:02 pmFollowed by: 11 members; Thanked: 20 times; GMAT Score:760

by mcdesty » Fri Jul 11, 2014 6:36 am

I think you are missing one more step. See image below

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Last edited by mcdesty on Sat Jul 12, 2014 8:17 am, edited 2 times in total.

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GMATinsight: Legendary Member; Posts: 1100; Joined: Sat May 10, 2014 11:34 pmFollowed by: 24 members; Location: New Delhi, India; Thanked: 205 times

by GMATinsight » Fri Jul 11, 2014 6:40 am

Your mistake is highlighted with Red line

In the beginning of the sum = 100
After 1 year = 100 + (50% 0f 100) = 100 + 50 = 150
After 2 year = 150 + (50% 0f 150) = 150 + 75 = 225
After 3 year = 225 + (50% 0f 225) = 225 + 112.5 = 337.5

Therefore % change = (337.5-100) = 237.5%

Answer Option: C

Last edited by GMATinsight on Fri Jul 11, 2014 6:49 am, edited 1 time in total.

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netdiag2015: Newbie | Next Rank: 10 Posts; Posts: 5; Joined: Wed Feb 26, 2014 10:56 am; Thanked: 1 times

by netdiag2015 » Fri Jul 11, 2014 6:43 am

Year 1: 50% of the original salary
Year 2: 50% * 1.5 = 75% (50% of the original salary + 50% of the rise salary)
Year 3: 75% * 1.5 = 112.2%
50%+75%+112.5%= 237.5%

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GMATGuruNY: GMAT Instructor; Posts: 15539; Joined: Tue May 25, 2010 12:04 pmFollowed by: 1906 members; Location: New York, NY; Thanked: 13060 times; GMAT Score:790

by GMATGuruNY » Fri Jul 11, 2014 6:51 am

[email protected] wrote:Am I wrong in assuming 100 at the start of the first year 50% increase will be 150 in the second year and again 50% increase in the third year making it 225? So the net increase will be

A 50% increase 3 years in a row means that the salary increases by 50% a total of 3 times.
Let the starting salary = 100.
1st year increase = 100+ 50% of 100 = 100+50 = 150.
2nd year increase = 150 + 50% of 150 = 150+75 = 225.
3rd year increase = 225 + 50% of 225 = 225+112.5 = 337.5.
Total increase = 337.5 - 100 = 237.5.
Total percent increase = (total increase)/(starting salary) * 100 = (237.5/100) * 100 = 237.5%.

The correct answer is C.

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by [email protected] » Fri Jul 11, 2014 11:09 am

Hi Shibriz,

It's good that you posted this question, since something like it will show up on Test Day and it's a question that a lot of people get wrong (and it's because they make 1 silly mistake).

Each of the other posts in this string explains a way to approach the question (either by TESTing VALUES or doing math), so I won't rehash any of that here. When a question talks about an increase or decrease, there's always some kind of "starting value", so it's worth noting that on your pad.

"START = _____"

"Year 1 = "
"Year 2 = "
Etc.

You know the strategy and you know how to do the math, so this is an issue of accuracy more than anything else.

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