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    Question

    A and B started a business with initial investments of

    Rs. 25000 and Rs. 40000 respectively. After one year, a profit of Rs. 3250 is earned. A being a working partner gets 15% 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.
    A Rs. 600 Correct Answer Incorrect Answer
    B Rs. 682 Correct Answer Incorrect Answer
    C Rs. 650 Correct Answer Incorrect Answer
    D Rs. 695 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    The ratio of their investments = 25000:40000 = 5:8 Profit share of A for being a working partner = 0.15 times; 3250= Rs. 487.5 Profit share of A for his investment = 5/13 times; 0.85 times; 3250 = Rs. 1062.5 Total profit of A = Rs. 1062.5 Compound interest earned by A = 1550{(1 + 0.20)2ndash; 1} = Rs. 682

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