IIFT 2019 Question Paper | Quants

CAT Questions

The best way to boost your IIFT prep is to practice the actual IIFT Question Papers. 2IIM offers you exactly that, in a student friendly format to take value from this. In the 2019 IIFT, quants were a mixed bag of questions of varying difficulty, with some routine questions and the others were very demanding. Some beautiful questions that laid emphasis on Learning ideas from basics and being able to comprehend more than remembering gazillion formulae and shortcuts.

Question 8: An E-rickshaw owner makes 24 trips a month with 4 passengers per trip. If his interest cost for purchase of E-rickshaw is Rs 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.

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Video Explanation

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Explanatory Answer

Here, the total cost is given to be proportional to the interest cost. Therefore, if the interest cost decreases by 10%, the total cost also decreases by 10%.
So, if we assume that the interest cost is 100 for the first scenario then the total cost would be 90 for the second scenario.
The revenue in the first scenario is 24 x 4, and the revenue in the second scenario is 20 x 5.
The profit percentage is 15% so the revenue of in the first scenario is 1.15 Total Cost


For simplicity we put variables x and y in the revenue and total cost so it is easier to understand the comparisons.

The revenue to total cost of in the first scenario is:
Revenue/ Total Cost = \\frac{24*4x}{100y}) = 1.15
Which means x/y = 115/24*4
The revenue to total cost of in the second scenario is:
Revenue/ Total Cost = \\frac{20*5x}{90y}) = \\frac{100*115}{90*96}) = 1.3333
Therefore the profit percentage is 33.33%

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The question is "The question is: 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?"

Hence, the answer is, "33.33"