Question

Mahindra set up a factory by investing Rs. 2500000. During the first two years, his profits were 5% and 10% respectively. If each year the profit was on previous year's capital, calculate his profit.

Please give step by step explanation.

Answer 1

Answer:

It is given that

Investment = 2500000

Rates of profit during first two years = 5% and 10%

We know that

Capital after two years (A) = P(1=r/100)

n

Substituting the values

=2500000(1+5/100)(1+10/100)

By further calculation

=2500000×21/20×11/10

=2887500

So the net profit = A - P

Substituting the values

=2887500−2500000

= 387500