A company's revenue was $500,000 last year. This year, revenue increased by 20% from last year's revenue and then decreased by 10% from the increased amount. What is the company's revenue this year?
- $500,010
- $550,000
- $600,000
- $540,000 (correct answer)
- $450,000
Explanation: This question tests compound percent change, where multiple percent changes are applied sequentially. When calculating percent change, each percentage is based on the value at that stage, not the original. First, revenue increases by 20% from $500,000: $500,000 × 1.20 = $600,000. Then it decreases by 10% from this new amount: $600,000 × 0.90 = $540,000. The final revenue is $540,000. A common mistake is to combine the percentages incorrectly, such as thinking +20% - 10% = +10% overall, which would incorrectly yield $550,000.