Question

The production of a company has ups and downs every year. The production increases for two consecutive years consistently by 15% and in the third year it decreases by 10%. Again in the next two years it increases by 15% each year and decreases by 10% in the third year. If we start counting from the year 1998, approximately what will be the effect on production of the company in 2002 ? 

(a) 37% increase 

(b) 32% increase 

(c) 42% increase 

(d) 52% increase

Answer 1

(a) 37% increase

Let the production in 1998 be 100 units. Then, Production in 2002

= 100\(\big(1+\frac{15}{100}\big)^2\)\(\big(1-\frac{10}{100}\big)\)\(\big(1+\frac{15}{100}\big)\)

= 100 x \(\frac{23}{20}\) x \(\frac{23}{20}\) x \(\frac{9}{10}\)x \(\frac{23}{20}\) = 136.88

\(\therefore\) Increase in production = (136.88 – 100)%

= 36.88% = 37%