Original capital borrowed by Sumit = ₹ 50000
Sumit suffered a loss of 20% in his food products business.
∴ Loss suffered in the first year = 20% of 50000
= \(\frac{20}{100}\) × 50000
= ₹10000
Remaining capital = Original capital – loss suffered = 50000- 10000
= ₹ 40000
Sumit invested the remaining capital i.e. ₹ 40,000 in a new sweets business.
He made a profit of 5%.
Profit in sweets business = 5% of 40000
= \(\frac{5}{100}\) x 40000 100
= ₹ 2000
New capital with Sumit after the profit in new sweets business = 40000 + 2000 = ₹42000
Since, the new capital is less than the original capital,
we can conclude that Sumit suffered a loss.
Total loss on original capital = Original capital – New capital
= 50000 – 42000 = ₹ 8000
∴ Sumit suffered a loss of 16% on the original capital.