GED Mathematical Reasoning TestQuantitative Problem Solving with Rational NumbersHard
A stock's value decreased by 15% in January and then increased by 20% in February. If the stock started at $120, what was its value at the end of February?
- A$118.80
- B$123.60
- C$125.00
- D$122.40
Show answer & explanationAnswer & explanation
Correct answer: D. $122.40
January: 15% decrease means the value is 100% - 15% = 85% of the original. $120 * 0.85 = $102.00. February: 20% increase means the value is 100% + 20% = 120% of the January value. $102.00 * 1.20 = $122.40.
Why the other options are wrong
- A. This could be a miscalculation, perhaps 10% increase after the decrease.
- B. This is an incorrect calculation; possibly adding 5% to the original value.
- C. This would be the value if the net change was +4.17%.
Sequential Percentage Change
When a value undergoes multiple percentage changes, each change is applied to the *new* value resulting from the previous change, not the original value.
- For a decrease of X%, multiply by (1 - X/100).
- For an increase of Y%, multiply by (1 + Y/100).
- Changes are multiplicative, not additive, to the original percentage.
Memory trick: First change, new base, second change, new pace.