How to Solve Percentage Increase Problem? {VIDEO explanation}

Last week I have posted a How to solve Percentages ? {simple solution} ; this week I would like to provide a real-world problem which is generally appeared on the GRE exam.

Problem:

Last year, John's start-up company showed a profit of $20,000. This year, the same company showed a profit of $25,000. If hir company shows the same percent increase in profit in the coming year, what will that profit be?

A) $27,500
B) $30,000
C) $31,250
D) $32,500
E) $35,000

Explanation:

What to Calculate: The problem asks us to calculate his profit next year.

This year increase was, $25,000 - $20,000 = $5,000

To express that increase as a percent, compare the amount, $5,000 to the previous year's profit, $20,000. That is, find what percent $5,000 is of $20,000

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Now you need to find the amount of the anticipated increase in profit for next year so find 25% of $25,000.

Finally, add the amount of the anticipated increase to the current profit to find his next year's profit:

$25,000 + $6,250 = $31,250.

Choice (C) is correct...

Video Explanation: