Jitendra set up a factory by investing Rs 2500000.

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.

Solution:

Profit at the end of the first year $=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)$

$=2,500,000\left(1+\frac{5}{100}\right)$

$=2,500,000(1.05)$

$=2,625,000$

Profit at the end of the second year $=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)$

$=2,625,000\left(1+\frac{10}{100}\right)$

$=2,625,000(1.10)$

$=2,887,500$

Total profit $=$ Rs $2,887,500-$ Rs $2,500,000$

$=$ Rs 387,500

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