Step 1: Find who started with how much:
The starting amounts are 40, 30, 20, 20 and 10. By fact III, Ganesh started with more money than exactly one other person. If he had 40 or 30 he would beat three or more people; if he had 10 he would beat nobody. With one of the two Rs. 20 holders he beats only the Rs. 10 boy (the other Rs. 20 boy has the same amount, not less). So Ganesh started with Rs. 20.
Step 2: Alam:
Ganesh spent Rs. 3.50 (VII), so Alam spent \(10 \times 3.50 = \) Rs. 35 (VIII). Alam must have started with at least Rs. 35, so he started with Rs. 40 and ended with \(40 - 35 = \) Rs. 5.
Step 3: Sandeep, Daljeet and Jugraj:
The amounts left are 30, 20 and 10. Daljeet started with 2/3 of Sandeep (IV): \(20 = \tfrac{2}{3} \times 30\). So Sandeep started with Rs. 30, Daljeet with Rs. 20, and Jugraj with Rs. 10 (this agrees with I: Alam 40 > Jugraj 10).
Step 4: Test the four statements:
Option (1): Alam ended with Rs. 5, not Rs. 9.50. False.
Option (2): If Sandeep ended with Re. 1, he spent Rs. 29, so Daljeet spent \(29 - 1.50 = 27.50\), which is more than the Rs. 20 Daljeet had. Impossible. False.
Option (4): Ganesh spent Rs. 3.50, so he ended with \(20 - 3.50 = 16.50\), not Rs. 4. False.
Option (3): Jugraj started with Rs. 10 (correct). Ending with Rs. 7 means he spent Rs. 3, which is less than Ganesh's Rs. 3.50, so he can be the one who spent the least, and Rs. 7 is more than Alam's Rs. 5. For Alam not to end with the least, Daljeet must end with less than Rs. 5. For example, Daljeet spends Rs. 15.50 and ends with Rs. 4.50; Sandeep then spends Rs. 17 and ends with Rs. 13. Every fact I to VIII holds, so the statement can be true.
Final Answer:
The correct option is (3): Jugraj started with Rs. 10 and ended with Rs. 7.