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Application of Formula of CI

Jitendra set ...

Question

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

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Solution

Investment in the beginning
Profit during the first 2 years $= 5 %$ and $10 %$ respectively.
$∴$ Investment after 2 years will be
$= R s . 2500000 (1 + \frac{5}{100}) (1 + \frac{10}{100})$
$= R s . 2500000 \times \frac{21}{20} \times \frac{11}{10}$
$= R s . 2887500$
$∴$ Amount of profit
= Rs. 2887500 - Rs. 2500000
= Rs. 387500

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