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If the amount invested by the two companies in 2005 was equal, what was the ratio of the total income of the Company A to that of B in 2005?

A 31: 33

B 33: 31

C 34: 31

D 14: 11

E None of these

Solution

Correct Answer: Option C

Total income = Profit earned + Total investment in the year.

Investment = (Profit earned/Profit percentage) × 100

Profit percentage of A in 2005 = 70%

Profit percentage of B in 2005 = 55%

Investment of A in 2005 = PA/0.7

Investment of B in 2005 = PB/0.55 [PA and PB are profits of A and B respectively]

Given both investments are same ⇒ PA/PB = 0.7/0.55

Total income of A in 2005 = PA + PA/0.7 = PA (1 + 1/0.7)

Total income of B in 2005 = PB (1 + 1/0.55)

∴ Ratio of incomes = \(\frac{{{{\rm{P}}_{\rm{A}}}}}{{{{\rm{P}}_{\rm{B}}}}} \times \frac{{1 + \frac{1}{{0.7}}}}{{1 + \frac{1}{{0.55}}}} = \frac{{0.7}}{{0.55}} \times \left( {\frac{{1.7}}{{1.55}}} \right) \times \frac{{0.55}}{{1.7}} = \frac{{1.7}}{{1.55}}\)

∴ Ratio = 1.7: 1.55 = 34: 31

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