Question
A and B partnered to start a business with initial
investments of Rs. 1,200 and Rs. 1,500, respectively. After one year, they both reinvested additional amounts, with A contributing Rs. 600 and B adding Rs. 1,000. At the end of two years, their combined profit amounted to Rs. 4,200. A choose to reinvest his share of the profit in a scheme offering a 10% annual compound interest for two years. How much interest did A earn from this investment?Solution
Respective ratio of the profits of A and B = 1200 + 1200 + 600: 1500 + 1500 + 1000 = 3000: 4000 = 3:4 So the profit share of A = 4200 × 3/7 = Rs. 1,800 Interest earned by A = 1800 × {(1 + 0.10)2 – 1} = 1800 × 0.21 = Rs. 378
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