Rhoades Corp. is a law firm. They continue to bring on new associates because they continue to attract new clients and cases. Their accounting department has compiled the following information for the three years they have been in operation: What is the percent change in net income from Year 1 to year 3?
A) 11.51% decrease
B) 11.51% increase
C) 29.87% increase
D) 75.03% increase

Question

Rhoades Corp. is a law firm. They continue to bring on new associates because they continue to attract new clients and cases. Their accounting department has compiled the following information for the three years they have been in operation:  What is the percent change in net income from Year 1 to year 3?
A) 11.51% decrease 
B) 11.51% increase 
C) 29.87% increase 
D) 75.03% increase

Quizplus · Accepted Answer

This question requires familiarity doing calculations using Excel. To calculate the change in net income from Year 1 to year 3, first calculate the net income for Year 1 and for Year 3. Year 1: In a cell B4 enter formula "= B2 - B3" that should return a value of $37,277. Repeat this process for Year 3 to find the value of $65,247. Finally, to calculate the percentage change, use the following formula (Year 3 Net Income - Year 1 Net Income)/(Year 1 Net Income) = ($65,247 - $37,277)/$37,277 or 75.03% increase (Choice D).