Test Index

Time Value of Money

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Question : 15 of 99

Marks: +1, -0

If an investment of

\text{Rs }60000

\text{Rs.\ }70000

respectively yields an income of

\text{Rs. }5750

and ₹6500 then an investment of

\text{Rs.}90000

would yield income of ₹ __________.

7500
8000
7750
7800

Solution:

Concept:

The relationship between investment and income is linear, so we find the line passing through the two given points.

Explanation:

Let income

Y

be a linear function of investment

I

:

Y = a + b I

.

From the data:

I = 60000

gives

Y = 5750

;

I = 70000

gives

Y = 6500

.

Slope

b = \frac{6500 - 5750}{70000 - 60000} = \frac{750}{10000} = 0.075

.

Using first point:

5750 = a + 0.075 \times 60000 = a + 4500 \Rightarrow a = 1250

.

Thus

Y = 1250 + 0.075 I

.

For

I = 90000

:

Y = 1250 + 0.075 \times 90000 = 1250 + 6750 = 8000

.

Answer:

₹ 8000

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