Question - GMAT Math - Word Problem

Question - GMAT Math - Word Problem

Jimmy invested $20,000 in a mutual fund account exactly three years ago. The value of the account increased by 10 percent during the first year and decreased 5 percent during each of the next two years. What is the value of the account today?

(A) $20,750

(B) $20,700

(C) $19855

(D) $20,000

(E) $19,000

Solution

First Year,

10% of $20,000 is 20,000(0.1) = 2,000,

so the value of the account after the first year is 20,000 + 2000 = 22,000.

Second Year,

5% of 22,000 is 22000 (.05) = 1100,

so the value of the account after the second year is 22,000 - 1100 = 20,900

Third Year

5% of 20,900 is 20900 * (.05) 1045,

so the value of the account after the third year is 20900 - 1045 = 19855

choice (C) is the correct answer