In 2008, the profits of Company N were 10 percent...

BREAKING: Target Test Prep releases Brand New 2026 On Demand GMAT prep course

Redeem

This topic has expert replies

Post new topic Post Reply

Previous Topic Next Topic

BTGmoderatorLU: Moderator; Posts: 2505; Joined: Sun Oct 15, 2017 1:50 pm; Followed by:6 members

In 2008, the profits of Company N were 10 percent...

by BTGmoderatorLU » Sat Mar 10, 2018 1:50 pm

In 2008, the profits of Company N were 10 percent of revenues. In 2009, the revenues of Company N fell by 20 percent, but profits were 15 percent of revenues. The profits in 2009 were what percent of the profits in 2008?

A. 80%
B. 105%
C. 120%
D. 124.2%
E. 138%

The OA is C.

I solve this PS question as follow,

revenue 2008 = 100
profit = 10

revenue 2009 =80
profit=12

ans=(12/10)*100=120%. Option C.

Experts, any suggestion? Thanks in advance.

Quote

Source: Beat The GMAT — Problem Solving | Sat Mar 10, 2018 1:50 pm

GMAT/MBA Expert

[email protected]: Elite Legendary Member; Posts: 10392; Joined: Sun Jun 23, 2013 6:38 pm; Location: Palo Alto, CA; Thanked: 2867 times; Followed by:511 members; GMAT Score:800

by [email protected] » Sat Mar 10, 2018 4:17 pm

Hi LUANDATO,

We're told that in 2008, the profits of Company N were 10 percent of revenues and in 2009, the revenues of Company N fell by 20 percent, but profits were 15 percent of revenues. We're asked for the profits in 2009 as a percent of the profits in 2008. The approach that you used (TESTing VALUES) is PERFECT for this question. You could also approach this question Algebraically:

Revenue in 2008 = R
Profits in 2008 = (.1)(R) = .1R

Revenue in 2009 = R - (.2)(R) = (.8)R
Profits in 2009 = (.15)(.8R) = .12R

Profits in 2009 relative to Profits in 2008 = .12R/.1R = 12R/10R = 12/10 = 120%

Final Answer: C

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

Contact Rich at [email protected]

Quote

GMAT/MBA Expert

Scott@TargetTestPrep: GMAT Instructor; Posts: 8086; Joined: Sat Apr 25, 2015 10:56 am; Location: Los Angeles, CA; Thanked: 43 times; Followed by:29 members

by Scott@TargetTestPrep » Sun Jun 09, 2019 6:03 pm

BTGmoderatorLU wrote:In 2008, the profits of Company N were 10 percent of revenues. In 2009, the revenues of Company N fell by 20 percent, but profits were 15 percent of revenues. The profits in 2009 were what percent of the profits in 2008?

A. 80%
B. 105%
C. 120%
D. 124.2%
E. 138%

We can let the revenues in 1998 = 100. Thus, the profits in 1998 = 100 x 0.1 = 10, the revenues in 1999 = 100 x 0.8 = 80, and the profits in 1999 = 80 x 0.15 = 12. Therefore, the profits in 1999 were 12/10 x 100 = 120 percent of the profits in 1998.

Answer: C

Scott Woodbury-Stewart
Founder and CEO
[email protected]