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If the investments of Company A in 2007 and 2008 were equal, what is the difference between the profits earned in the two years if the income in 2008 was Rs.24 lakhs?

A Rs. 2.25 lakhs

B Rs. 3.6 lakhs

C Rs. 1.8 lakhs

D Rs. 2.6 lakhs

E None of these

Solution

Correct Answer: Option A

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

Profit earned = (Investment × Profit percentage) ÷ 100

Profit percentage of A in 2007 = 45%

Profit percentage of A in 2008 = 60%

Say I is the investment of A in 2007 and 2008.

⇒ Profit earned in 2007 = (I × 45)/100 = 0.45 × I

⇒ Profit earned in 2008 = (I × 60)/100 = 0.60 × I

Given Income in 2008 = 24 lakhs ⇒ I + 0.60 × I = 24 lakhs

⇒ 1.60 × I = 24 lakhs

⇒ I = 15 lakhs.

∴ Profit earned in 2007 = 0.45 × 15 = 6.75 lakhs and profit earned in 2008 = 0.60 × 15 = 9 lakhs.

∴ Difference between profits earned = 9 – 6.75 = 2.25 lakhs

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