If A invests $15,000 and B invests $25,000 in a business, and they share the pro
Practice Questions
Q1
If A invests $15,000 and B invests $25,000 in a business, and they share the profit in the ratio of their investments, what will be B's share if the total profit is $20,000?
$8,000
$10,000
$12,000
$15,000
Questions & Step-by-Step Solutions
If A invests $15,000 and B invests $25,000 in a business, and they share the profit in the ratio of their investments, what will be B's share if the total profit is $20,000?
Correct Answer: $12,500
Step 1: Identify the amount A invested, which is $15,000.
Step 2: Identify the amount B invested, which is $25,000.
Step 3: Calculate the total investment by adding A's and B's investments: $15,000 + $25,000 = $40,000.
Step 4: Determine the ratio of B's investment to the total investment: B's investment is $25,000, so the ratio is $25,000 / $40,000.
Step 5: Simplify the ratio: $25,000 / $40,000 = 0.625.
Step 6: Calculate B's share of the total profit: Multiply the total profit ($20,000) by B's ratio (0.625): $20,000 * 0.625 = $12,500.
Step 7: Conclude that B's share of the profit is $12,500.
Profit Sharing Ratio – Understanding how to calculate profit shares based on the ratio of investments made by partners.
Proportional Distribution – Applying proportional distribution to determine individual shares from a total profit based on contributions.
