[email protected] wrote:Hi Experts,
Can we just divide the sum of percentage given over three years to get percentage given for each year?
We are given that the percentage increase for each year was the same!
No.
To see why, test a case with EASY VALUES.
Let the 3rd year profits = 100 and the annual percent increase = 10%.
Then:
4th year increase = 10% of 100 = 10.
4th year profits = 100 + 10 = 110.
5th year increase = 10% of 110 = 11.
5th year profits = 110 + 11 = 121.
Result:
From the 3rd year to the 5th year, the profits increase from 100 to 121, an increase of 21%.
As you can see, the annual percent increase (10%) is a bit LESS than 1/2 the total percent increase (21%).
The reason is that the percent increase is COMPOUNDED from year to year.
In the DS problem above:
Since the profits increase by a total of 60% over the course of 2 years, and the percent increase is the same each year, the annual percent increase is a bit less than 1/2 of 60% (about 26.25%).
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