Two friends A and B invest in a business in partnership. B borrows 20% of A's salary, combines it with 60% of his salary and invest with A, who puts all of his remaining salary. One year later the ratio of profit of A and B is 5:3 respectively and B returns Rs.21000 to A which he borrowed from him. What is the difference between salary of A and B?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 56000
Partners who invest for the same time share the profit in the ratio of their investments. Let A’s salary be a and B’s salary be b.
A’s salary (the amount B returns is the 20% he borrowed):
20% of A’s salary is 21000: \(0.2a=21000\), so \(a=1,05,000\)
The investments:
A invests the rest of his salary: \(0.8a=84,000\)
B invests the borrowed amount and 60% of his own salary: \(21000+0.6b\)
B’s salary (investments in the profit ratio 5 : 3):
A’s investment over B’s is 5 over 3: \(\displaystyle \frac{84000}{21000+0.6b}=\frac{5}{3}\)
\(252000=105000+3b\)
So B’s salary is \(b=49,000\)
The difference:
A’s salary minus B’s salary: \(1,05,000-49,000=\) Rs. 56,000