IIFT 2012 Question Paper Question 23

Question 23

The annual production in cement industry is subject to business cycles. The production increases for two consecutive years consistently by 18% and decreases by 12% in the third year. Again in the next two years, it increases by 18% each year and decreases by 12% in the third year. Talking 2008 as the base year, what will be the approximate effect on cement production in 2012?

Solution

Let 100 be the value in 2008.
In 2009 it will become 100*1.18
In 2010 it will become 100*1.18*1.18
In 2011 it will become 100*1.18*1.18*0.88
In 2012 it will become 100*1.18*1.18*0.88*1.18 $$\approx$$ 145
thus, the effect = 45%
Hence, option C is the correct answer.



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