Answer to Question #295875 in Financial Math for Ella

Question

 

The net revenue of a company rose 3.6 %, while inflation rate was 3.0 %. Calculate the relative real change in revenue as percentage.

 

Answer 1

Let revenue of a particular year is $' x '$

then revenue of next year will be

$\begin{aligned} & x+3.6 \% \text { of } x=x+0.036 x \\ =& 1.036 x \end{aligned}$

now, Inflation 3%

So,

$\begin{aligned} &=1.036 x-1.036 x \times 3 \% \\ &=1.036 x-0.03108 x \\ &=1.00492 x \end{aligned}$

Revenue of particular year was $x$ after one year value of revenue is $1.00492 x$ .

So, change $\%=\frac{1.00492 x-x}{x} \times 100 \%=0.492 \%$

Relative real change in revenue $=0.492 \%$