Question

Ashish started the business with an initial investment of Rs. 500000. In the first year, he incurred a loss of $4\%$. However, during the second year he earned a profit of $5\%$ which in third year, rose to $10\%$. Calculate the net profit for the entire period of 3 years.

Answer 1

Initial investment = Rs. 500000
In the first year, rate of loss $=4\%$
In the second year, rate of gain $=5\%$
and in the third year, rate of gain $=10\%$
$\therefore$ Investment after 3 years
$=(1-\frac{R_1}{100})(1+\frac{R_2}{100})(1+\frac{R_3}{100})$
$=Rs.500000(1-\frac{4}{100})(1+\frac{5}{100})(1+\frac{10}{100})$
$=Rs.500000\times \frac{24}{25}\times \frac{21}{20}\times \frac{11}{10}=Rs.554400$
$\therefore$ Net profit = Rs. 554400 - Rs. 500000
= Rs. 54400