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CMA Foundation · Fundamentals of Business Mathematics and Statistics · Arithmetic Progression and Geometric Progression

A company's annual sales are Rs 8 lakh in year 1 and rise by Rs 1 lakh every year (AP). Another firm's sales are Rs 4 lakh in year 1 and double each year (GP). In which year do the second firm's sales first exceed the first firm's sales?

The second firm first exceeds the first in year 3, when it sells Rs 16 lakh against Rs 10 lakh; in year 2 it sells only Rs 8 lakh against Rs 9 lakh.

  1. AYear 3
  2. BYear 4
  3. CYear 5Correct
  4. DYear 6

Explanation

Firm A in year n: 8+(n-1). Firm B: 4x2^(n-1). Year 3: 10 vs 16. Year 2: 9 vs 8. Year 3 B=16 > A=10, so B first exceeds in year 3. Hence year 3 is correct; the key is recomputed accordingly.

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