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Question:

Raj invested ₹ 10000 in a fund. At the end of first year, he incurred a loss but his balance was more than ₹ 5000. This balance, when invested for another year, grew and the percentage of growth in the second year was five times the percentage of loss in the first year. If the gain of Raj from the initial investment over the two year period is 35%, then the percentage of loss in the first year is

Explanation:

Let the loss incurred by Raj in first year = P%

∴ Amount remaining after 1st year = 10,000 $(1 - \frac{P}{100})$ > 5,000 …(1)

Now the percentage growth next year = 5P%

∴ Amount after 2 years = 10,000 $(1 - \frac{P}{100})$ $(1 + \frac{5 P}{100})$

Overall growth after 2 years is 35%, hence amount after 2 years should be 10,000 × 1.35

⇒ 10,000 $(1 - \frac{P}{100})$ $(1 + \frac{5 P}{100})$ = 10,000 × 1.35

⇒ 10000 – 5P² + 400P = 13500

⇒ 5P² - 400P + 3500 = 0

⇒ P² – 80P + 700 = 0

⇒ P = 10% or 70%.

P cannot be 70% since amount remaining after 1st year has to be greater than 5000 [from (1)]

∴ P = 10%

Hence, option (a).

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