Let the original profits be $x. 5% increase in profits will give us: 105/100×x=$1.05x 3% reduction in new profits ill give us the latest amount to be: 97/100×1.05x =$1.0185x comparing our new profits to our original amount of $x we shall have new percentage increase to be: (1.0185x-x)/x×100 =1.85% Thus our final increase 1.85%