Question
Which is better investment , 12% stock at per with an income tax a the rate of 5 paise per rupee or `14 2/7`% stock at 120 free from income tax.
Answer: Option B
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Let investment in each case = Rs. (100 x 120)
Income from 12% stock = Rs. `(12/100 xx 100 xx 120)` = Rs. 1440
Net income = Rs. `(1440 - 5/100 xx 1440)` = Rs. 1368
Income from `14 2/7`% stock = Rs. `((100)/(7 xx 20) xx 100 xx 120)` = Rs. 1428.57
Clearly , `14 2/7`% sock is better
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