Question : The price of a car is first increased by 35% and after that, the price is decreased by 25% due to a reduction in sales. What is the net percentage change in the final price of the car?
Option 1: Decreases by $2 \frac{1}{5}$%
Option 2: Increases by $2 \frac{1}{3}$%
Option 3: Decreases by $1 \frac{3}{5}$%
Option 4: Increases by $1 \frac{1}{4}$%
Correct Answer: Increases by $1 \frac{1}{4}$%
Solution :
Let the initial price of the car be 100.
After a 35% increase, the price becomes $(100×\frac{135}{100}) = 135$
After 25% decrease on the new price = $135 - \frac{25}{100}\times 135=135-\frac{135}{4}=\frac{405}{4}$
Percentage Change = $\frac{\text{Final Price – Initial Price}}{\text{Initial Price}} \times 100$
Substituting the values we have:
$\therefore$ Percentage Change = $\frac{\frac{405}{4} -100}{100} \times 100 = 1 \frac{1}{4}$%
Hence, the correct answer is Increases by $1 \frac{1}{4}$%.
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