Question

Which is better investment: $7\%$ Rs.100 shares at Rs.120 or $8\%$ Rs.10 shares at Rs.13.50?

• A. 7% Rs.100 at Rs 120
• B. 8% Rs.10 shares at Rs.13.50
• C. Both are equally good
• D. Cannot be compared, as the total amount of investment is not given.

Answer 1

The correct option is B

8% Rs.10 shares at Rs.13.50

In the first case:

As, investment is Rs.120 income is Rs.7

Hence, when investment is Rs.120 $\times$ 13.50 income is (Rs.7 $\times$ Rs120 $\times$ 13.50)/Rs.120

= Rs.94.50

In the second case:

As, investment is Rs.13.50 income is $8\%$ of Rs.10 = Re.0.80 Hence, when investment is Rs.120 $\times$ 13.50 income is

(Re.0.80 $\times$ Rs.120 $\times$ 13.50)/Rs.13.50

= Rs.96.00

Therefore, second investment is better.