Two friends A and B started a business by investing ₹1,50,000 and ₹2,50,000, respectively. They agreed to distribute their earnings in the same ratio as their investments. After a year, the profit earned was ₹6,00,000. Each of them added ₹50,000 to their respective profits and invested in a different project. If this project gave a yield of ₹4,20,000, then A’s share in the profit is:
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. ₹1,65,000.
Two friends A and B started a business by investing ₹1,50,000 and ₹2,50,000, respectively.
Ratio of investment of A and B = (150000) : (250000) = 3 : 5
Ratio of investment = Ratio of profit
Profit earned after an year = Rs. 6,00,000
⇒ A's share in the profit = 3 × 600000/8 = Rs. 2,25,000
⇒ B's share in the profit = 5 × 600000/8 = Rs. 3,75,000
Each one added Rs. 50000 to their profit and invested.
⇒ A's total investment = 2,25,000 + 50,000 = Rs. 2,75,000
⇒ B's total investment = 3,75,000 + 50,000 = Rs. 4,25,000
New ratio of investment of A and B = (275000) : (425000) = 11 : 17
This new project gave a yield of Rs. 4,20,000
⇒ A's share in the profit = 11 × (420000)/28 = Rs. 1,65,000.