Ankit had 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.

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KollegeApply · Accepted Answer

Both A and R are true and R is the correct explanation. Explanation: Company A: Dividend = 7% of ₹ 100 = ₹ 7. Investment price = ₹ 120. Rate of income = $\frac{7}{120}$ = 5.833...%. Company B: Dividend = 8% of ₹ 1000 = ₹ 80. Investment price = ₹ 1620. Rate of income = $\frac{80}{1620}$ = 4.938...%. Since 5.833% > 4.938%, investment in Company A yields a higher income, so A is true and R correctly explains it.

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