1997 AJHSME Problems/Problem 16

Problem

Penni Precisely buys <dollar/>100 worth of stock in each of three companies: Alabama Almonds, Boston Beans, and California Cauliflower. After one year, AA was up 20%, BB was down 25%, and CC was unchanged. For the second year, AA was down 20% from the previous year, BB was up 25% from the previous year, and CC was unchanged. If A, B, and C are the final values of the stock, then

$\text{(A)}\ A=B=C \qquad \text{(B)}\ A=B<C \qquad \text{(C)}\ C<B=A$

$\text{(D)}\ A<B<C \qquad \text{(E)}\ B<A<C$

Solution 1

AA is $100 \cdot 120\% = 100\cdot 1.2 = 120$ after one year. After the second year, AA is $120\cdot 0.8 = 96$ .

BB is $100 \cdot 75\% = 100\cdot 0.75 = 75$ after one year. After the second year, BB is $75\cdot 1.25 = 93.75$

CC remains unchanged throughout, and stays at $100$ .

Thus, $B < A < C$ , and the right answer is $\boxed{E}$

Solution 2

AA will be $100 \cdot \frac{6}{5} \cdot \frac{4}{5} = 100\cdot \frac{24}{25}$ at the end.

BB will be $100 \cdot \frac{3}{4} \cdot \frac{5}{4} = 100 \cdot \frac{15}{16}$ at the end.

CC will be unchanged at $100$ .

Since all the fractions are under $1$ , $C$ will be highest value.

Since $\frac{24}{25}$ is only $\frac{1}{25}$ away from $1$ , while $\frac{15}{16}$ is $\frac{1}{16}$ away from $1$ , $\frac{24}{25}$ is closer to $1$ , and will be closer to the original value.

Thus, $B < A < C$ , and the right answer is $\boxed{E}$

1997 AJHSME (Problems • Answer Key • Resources)
Preceded by Problem 15	Followed by Problem 17
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1997 AJHSME Problems/Problem 16

Contents

Problem

Solution 1

Solution 2

See also