IIFT 2019 Question 13

Question 13

An E-rickshaw owner makes 24 trips a month with 4 passengers per trip. If his interest cost for purchase of E-rickshaw is ₹ 120/month, he earns 15 percent profit a month (Profit is the difference between revenue and cost). What will be the approximate percentage profit for the same month if the owner undertakes 20 trips a month with 5 passengers and his interest cost is reduced by 10 percent for the month ?

Assume:
(a) Total cost to be proportional to the interest cost.
(b) Revenue per passenger is the same in both cases.

Solution

Consider the revenue per passenger = P

=> Total revenue = 24*4P = 96P

Since the total cost is proportional to interest, it can be assumed as 120*K

Total cost*(1+Profit/100)=Revenue 

=> 120K(1+15/100) = 96P ..........(1)

New Revenue = 20*5P = 120*(0.9)K*(1+Profit/100) ..........(2)

Dividing (2) by (1),

25/24  = (0.9/1.15)(1+Profit/100)

Profit/100 = (25*23)/(18*24) - 1 = 1.33-1

=> Profit = 33%, Option A is the answer.



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