Question

The production of a company for three
successive years has increased by 10%,
20% and 40% respectively. What is the
average increase in production?
(A) 30%
(B) 20.5%
(C) 20%
(D) 30.5%​

Answer 1

Given :  The production of a company for three successive years has increased by 10%, 20%, 40% respectively

To find : Average annual increase production

Solution:

The production of a company for three successive years has increased by 10%, 20%, 40% respectively

Let say initial production = P

production after 1 year - P(1 + 10/100) = 1.1P

Production after 2nd year = 1.1P(1 + 20/100)  =  1.1P * 1.2  = 1.32P

Production after 3rd  year = 1.32P(1 + 40/100)  =  1.32P * 1.4  = 1.848P

average annual increase production for  compounded  = R

then P ( 1 + R/100)³ = 1.848P

=> 1 + R/100 = 1.227

=> R = 22.7 %

average annual increase production  = 22.7 %  

None of the given option is correct  

if average is calculated without compounding then

100 * (0.848)/3 =  28.27%

​

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