CAT 1993 — QA Question 9
Successive Percentage ChangeEasy
The rate of increase of the price of sugar is observed to be two percent more than the inflation rate expressed in percentage. The price of sugar, on January 1, 1994, is Rs. 20 per kg. The inflation rate for the years 1994 and 1995 are expected to be 8% each. The expected price of sugar on January 1, 1996 would be
Answer & solution
Correct answer: Rs. 24.20
- A
Rs. 23.60
- B
Rs. 24.00
Rs. 24.20
- D
Rs. 24.60
Solution
Since the inflation rate is 8% in both the years 1994 and 1995, therefore, the rate of increase of the price of sugar is 10%.
∴ Price of sugar on January 1, 1996 = Price of sugar on January 1, 1994 × = 20 × 1.21 = Rs. 24.20 per kg.
Hence, option (c).