Two finance companies, P and Q, declared fixed annual rates of interest on the amounts invested with them. The rates of ...

Question

Two finance companies, P and Q, declared fixed annual rates of interest on the amounts invested with them. The rates of interest offered by these companies may differ from year to year. Year-wise annual rates of interest offered by these companies are shown by the line graph below. If the amounts invested in the companies P and Q in 2006 are in the ratio 8 : 9, then the amounts received after one year as interests from P and Q would be in the ratio:

A. 2 : 3
B. 3 : 4
C. 6 : 7
D. 4 : 3

Accepted Answer

The ratio of interest amounts from P and Q is 4 : 3, which matches option D. Two companies P and Q offer different annual interest rates each year. In 2006, P offered 6% and Q offered 4% annual interest (read from the line graph). Money is invested in both companies in the ratio 8:9, and we need the ratio of the interest earned after exactly one year. Since interest = Principal x Rate, the ratio of interests is (8 x 6%) : (9 x 4%) = 48 : 36 = 4 : 3.