Problem-Solving and Data Analysis practice question

Answer: A. 25%

Percent change compares the change with the ORIGINAL amount: (50,000 − 40,000) / 40,000 = 10,000 / 40,000 = 0.25 = 25%.

Why the other answers are wrong

B. 20%

20% divides the change by the NEW amount, 10,000 / 50,000. Percent increase is measured against the starting value, 40,000.

C. 10%

10% treats the $10,000 change as if it were 10 out of 100. The change has to be compared with the original 40,000: 10,000 is a quarter of it.

D. 125%

125% is 50,000 / 40,000 — the new amount as a percent of the old. The INCREASE is the extra 25%, not the whole 125%.

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