GMAT Focus EditionQuantitative ReasoningEasy
A stock's price increased by 15% in January and then decreased by 10% in February. What was the net percentage change in the stock's price over these two months?
- A5.0% increase
- B5.0% decrease
- C3.5% increase
- D3.5% decrease
Show answer & explanationAnswer & explanation
Correct answer: C. 3.5% increase
To find the net percentage change, apply the changes sequentially. An initial increase of 15% followed by a decrease of 10% on the new value results in a net change of 3.5% increase.
Why the other options are wrong
- A. This incorrectly calculates the net change as the simple difference between the two percentages, ignoring the base change.
- B. This incorrectly calculates a net decrease and miscalculates the simple difference.
- D. This incorrectly calculates a net decrease; the change is an increase.
Net Percentage Change
The overall percentage change in a value after multiple sequential percentage increases or decreases.
- Changes are applied sequentially to the current value.
- Not a simple addition/subtraction of percentages.
- Can be calculated as (Final Value / Initial Value - 1) * 100%.
Memory trick: First, find the 'new now' then apply the 'next then'.