Question
A and B started a business with initial investments of
Rs. 15000 and Rs. 25000 respectively. After one year, a profit of Rs. 16000 is earned. A being a working partner gets 25% of the profit for managing the business and rest of the profit is shared between them in the ratio of their investments. A invested his whole profit in a scheme offering 20% compound interest compounded annually. Find the interest earned by A after 2 years.Solution
The ratio of their investments = 15000:25000 = 3:5 Profit share of A for being a working partner = 0.25 times; 16000 = Rs. 4000 Profit share of A for his investment = 3/8 times; 0.75 times; 16000 = Rs. 4500 Total profit of A = Rs. 4500 Compound interest earned by A = 8500{(1 + 0.20)2ndash; 1} = Rs. 3740
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