Question

A city keeps track of the number of new small businesses which open in any given year, as well as how many of those new businesses report profit in excess of their initial investment after one year’s time. An example of the data collected can be viewed in the table below.

Year
1998
1999
2000
2001
2002
New
781
699
626
730
762
Profitable
311
205
217
264
244

If 684 new small businesses opened in 2003, approximately how many of them could be expected to turn a profit in excess of their initial investment by 2004?
a.
200
b.
236
c.
247
d.
272

Answer 1

Use the historical profit rate. Over 1998–2002, total profitable = 311+205+217+264+244 = 1241 and total new = 781+699+626+730+762 = 3598. The overall profit rate ≈ 1241/3598 ≈ 0.3449. For 684 new businesses: 684 × 0.3449 ≈ 236.1, so about 236. Answer: b.