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ICSE Class 10 Mathematics Question 42 of 49

Multiple-Choice Questions — Question 42

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Question 42

Ankit has the option of investing in company A, where 7%, ₹ 100 shares are available at ₹ 120 or in company B, where 8%, ₹ 1000 shares are available at ₹ 1620.

Assertion (A) : Investment in Company A is better than Company B.

Reason (R) : The rate of income in Company A is better than in Company B.

  1. Both A and R are correct, and R is the correct explanation for A.

  2. Both A and R are correct, and R is not the correct explanation for A.

  3. A is false, but R is true.

  4. Both A and R are false.

Answer

In company A,

N.V. = ₹ 100

M.V. = ₹ 120

Dividend = 7% = 7100×100\dfrac{7}{100} \times 100 = ₹ 7

∴ Investment = ₹ 120 and income = ₹ 7.

Income on ₹ 1 = 7120\dfrac{7}{120} = ₹ 0.0583

In company B,

N.V. = ₹ 1000

M.V. = ₹ 1620

Dividend = 8% = 8100×1000\dfrac{8}{100} \times 1000 = ₹ 80

∴ Investment = ₹ 1620 and income = ₹ 80.

Income on ₹ 1 = 801620\dfrac{80}{1620} = ₹ 0.0494

Since, rate of income is greater in company A.

∴ Assertion and Reason both are true and Reason is the correct explanation of Assertion.

Hence, Option 1 is the correct explanation.