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If the amount invested by Company B in 2004 is Rs.12 lakhs and the income of 2004 is equal to the investment in 2005, what is the amount of profit earned in 2005 by Company B?

A Rs.6.6 lakhs

B Rs.18.6 lakhs

C Rs.10.23 lakhs

D Rs.9.6 lakhs

E None of these

Solution

Correct Answer: Option C

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

Profit earned = (Investment × Profit percentage) ÷ 100

Profit percentage of B in 2004 = 55%

Profit earned by B in 2004 = (12 × 55)/100 = 6.6 lakhs

Income of B in 2004 = 6.6 + 12 = 18.6 lakhs

∴ Investment of B in 2005 = 18.6 lakhs

Profit percentage of B in 2005 = 55%

∴ Profit earned by B in 2005 = (18.6 × 55)/100 = 10.23 lakhs

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