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Question
Ashish started the business with an initial investment of Rs 500000. In the first year he incurred a loss of 4%. However during the second year he earned a profit of 5% which in third year rose to 10%. Calculate the net profit for the entire period of 3 years.
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Solution
Profit for three years = P \[\left( 1 - \frac{R_1}{100} \right)\left( 1 + \frac{R_2}{100} \right)\left( 1 + \frac{R_3}{100} \right)\]
\[ \Rightarrow 500, 000\left( 1 - \frac{4}{100} \right)\left( 1 + \frac{5}{100} \right)\left( 1 + \frac{10}{100} \right)\]
\[ = 500, 000\left( 0 . 96 \right)\left( 1 . 05 \right)\left( 1 . 10 \right)\]
\[ = 554, 400\]
Thus, the net profit is Rs 554, 40.
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