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    Question

    A and B started a business with initial investments of

    Rs. 28000 and Rs. 35000 respectively. After one year, a profit of Rs. 10000 is earned. A being a working partner gets 10% 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 12% compound interest compounded annually. Find the interest earned by A after 2 years.
    A Rs. 1272 Correct Answer Incorrect Answer
    B Rs. 1072 Correct Answer Incorrect Answer
    C Rs. 1202 Correct Answer Incorrect Answer
    D Rs. 1270 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    The ratio of their investments = 28000:35000 = 4:5 Profit share of A for being a working partner = 0.10 × 10000 = Rs. 1000 Profit share of A for his investment = 26/27 × 0.84 × 10000 = Rs. 4000 Total profit of A = Rs. 4000 Compound interest earned by A = 5000{(1 + 0.12)2 – 1} = Rs. 1272

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