Question

The income of an agent remains unchanged though the rate of commission is increased from 5% to 6.25%. Find the percentage reduction in the value of business.

Answer 1

Let the initial value of the business be ₹ 100 

∴ Original income of the agent = ₹ 5 

Let the new value of the business be ₹ x 

∴  New income of the agent 

`= "x" xx 6.25/100`

`= "x"/100 xx 625/100`

`= "x"/16`

Now original income = new income (Given) 

`5 = "x"/16`

x = 80

∴ New value of the business = ₹ 80 

∴ There is 20% reduction in the value of the business.