Ms. Adams sold two properties, X and Y, for $30,000 each. She sold property X for 20% more than she paid for it and sold property Y for 20% less than she paid for it. If expenses are disregarded, what was her total net gain or loss, if any, on the two properties?
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Classic trap! I almost picked E because I thought the 20% gains and losses cancel out. Then I remembered they apply to different cost bases. For X: 1.2C = 30000, so C = 25000, gain = 5000. For Y: 0.8C = 30000, so C = 37500, loss = 7500. Net loss = 2500. Took me a while to see it though.
Same here! The percentages are of different bases, so they don't cancel. Sneaky question.
I did the same thing at first. Now I always ask: percent of what?
Is the answer B? I got loss of $2,500 but I'm not 100% sure. Can someone confirm?
Yes, B is correct. Net loss of $2,500.
I got that too. The math checks out.
I made a silly mistake and thought the loss was $1,250 because I calculated 20% of 30,000 for each and then took half or something. Need to be more careful with the base amounts.
This is a good reminder to always set up equations for cost price when given selling price and percentage change. Don't just assume the percentages cancel.
What it tests
Your ability to compute percentage change, percentage of a whole, and to work backwards from a final value.
Common trap
Treating successive percentage changes as additive — a 10% rise then a 10% fall is not back to the start.