Person 1 and Person 2 invest in three mutual funds A, B, and C. The amounts they invest in each of these mutual funds are given in the table.
| Mutual fund A | Mutual fund B | Mutual fund C | |
|---|---|---|---|
| Person 1 | ₹10,000 | ₹20,000 | ₹20,000 |
| Person 2 | ₹20,000 | ₹15,000 | ₹15,000 |
At the end of one year, the total amount that Person 1 gets is ₹500 more than Person 2. The annual rate of return for the mutual funds B and C is 15% each. What is the annual rate of return for the mutual fund A?
Answer
(B)
Explanation
Let the annual return of fund A be \(r\). Each person invests ₹50,000 in total, so it is enough to compare the returns.
- Person 1: \(10{,}000r + 0.15 \times 40{,}000 = 10{,}000r + 6{,}000\)
- Person 2: \(20{,}000r + 0.15 \times 30{,}000 = 20{,}000r + 4{,}500\)
Person 1 gets ₹500 more, so \((10{,}000r + 6{,}000) - (20{,}000r + 4{,}500) = 500\), which gives \(1{,}500 - 10{,}000r = 500\) and \(r = 0.10\), i.e. 10%.
Answer: B