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Get access to the detailed solutions to the previous years questions asked in IIM IPMAT exam
Since we are given that the annual growth rate should be taken as constant, we can simply compare the ratio changes in the firm's PAT in 2019 and 2023 and compare them.
Firm A: 3000 to 3900; an increase of 900, giving the growth rate to be
900/3000 = 3/10 = 0.3
Firm C: 2400 to 3000; an increase of 600, giving the growth rate to be
600/2400 = 1/4 = 0.25
Firm E: 2400 to 3500; an increase of 1100, giving the growth rate to be
1100/2400 = 11/24 ≈ 0.45
Firm B: 2800 to 3800; an increase of 1000, giving the growth to be
1000/2800 = 5/14 ≈ 0.35
We can see that of the given ratios, the growth rate is highest for firm E (closest to 0.5).
Therefore, the highest ARG, among the given options, will be for firm E.