An investment increases by 20% in the first year and then decreases by 10% in the second year. What is the net percentage change over the two years?

A 8% increase

B 10% increase

C 8% decrease

D 10% decrease

✓ Correct Answer: Option A

Assume initial investment is 100. After a 20% increase, it becomes 100 * 1.20 = 120. After a 10% decrease, it becomes 120 * 0.90 = 108. The net change is (108 - 100) = 8, so an 8% increase.

💡 Why is A) the correct answer?

The correct answer to the question "An investment increases by 20% in the first year and then decreases by 10% in the second year. What is the net percentage change over the two years?" is Option A: 8% increase.

The other options — B) 10% increase, C) 8% decrease, D) 10% decrease — are incorrect for this GMAT Exam Prep question. As explained above: Assume initial investment is 100. After a 20% increase, it becomes 100 * 1.20 = 120. After a 10% decrease, it becomes 120 * 0.90 = 108. The net change is (108 - 100) = 8, so an 8% increase.

📚 About This GMAT Exam Prep Practice Question

This 2-level GMAT Exam Prep question from the Quantitative Reasoning topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free GMAT Exam Prep practice test or use flashcards for spaced repetition review.

Practice GMAT Exam Prep Quizzes → Browse All Questions Study Flashcards

An investment increases by 20% in the first year and then decreases by 10% in the second year. What is the net percentage change over the two years?

✓ Correct Answer: Option A

📚 About This GMAT Exam Prep Practice Question

Related GMAT Exam Prep Questions