In which rule for charitable giving is the donation amount certain to change by a constant percent rate from one year to the next?

Question

In which rule for charitable giving is the donation amount certain to change by a constant percent rate from one year to the next?

A. Every year donate $100 more than the amount donated the previous year.

B. Every year donate 9/8 of the amount donated the previous year

C. Every year, donate the sum if the amounts donated the previous two years.

D. Every year, donate the difference of the amounts donated the previous two years.

I think the answer is A?

Answer 1

Klauss -

The answer to this question is B since it is the only option that applies the same ratio to the previous year.

9/8 = 1.125 ratio which translates to a 12.5% increase over the prior year

As for the other answers:

A. A $100 annual increase will result in a declining percentage increase since the increase amount will stay the same but the prior year amount will keep increasing.

To demonstrate this: If the 1st year donation is $100, then increasing to $200 would be a 100% increase. The $100 increase in year 3 results in a $300 donation. 300/200 = 50% increase.

C. To make an example with this option... Let;s assume year 1 and 2 are both $200, then year 3 will be $400.

Year 4 will be 200+400 = 600, a 50% increase over prior year,

Year 5 will be 400+600 = 1000, a 66% increase over prior year ,

Year 6 will be 600+1000=1600, a 60% increase

Therefore this rule does not create a consistent % increase over the prior year

D To make an example with this option... Let;s assume year 1 is 200 and year 2 is $300, then year 3 will be 300-200 = $100

Year 4 will be 300-100 = $200, a 100% increase over prior year,

Year 5 will be 200-100 = $100, a 50% decrease over prior year ,

Year 6 will be 200-100 = 100 , no change from prior year

Therefore this rule does not create a consistent % increase over the prior year