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A and B put in Rs.300 and Rs.400 respectively into a business. A reinvests into the business his share of the first year's profit of Rs.210 where as B does not. In what ratio should they divide the second year's profit?

Correct answer: A. 39:40

  • A. 39:40
  • B. 40:39
  • C. 3:4
  • D. 4:3

Explanation

The first year's profit is divided in the ratio 300:400 = 3:4, so A receives Rs.210 x 3/7 = Rs.90. In the second year, A's capital becomes Rs.300 + Rs.90 = Rs.390, while B's remains Rs.400, so the ratio is Rs.390:Rs.400 = 39:40. The likely mistake is option c, 3:4, which keeps using the original capitals after A reinvests his profit.

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