Question

Maria Martinez and her sister, Christina, are planning to operate a small day care center together. Maria originally invested $24,000 in the business, and Christina invested $8,000. Maria and Christina decide to divide all of the profits and share all of the losses using a fixed ratio. If the ratio agreed upon is in proportion to their original investment, what would be Christina's share of a $60,000 end-of-year profit? (Hint: The original total investment was $32,000, which includes $8,000 from Christina and $24,000 from Maria. Christina's $8,000 is one-fourth, or 25 percent, of the total.)

Answer 1

Given:
Original Investments:
Maria : 24,000
Christina: 8,000
Total: 32,000

Profit and Loss Ratio
Maria: 24,000 / 32,000 = 75%
Christina: 8,000 / 32,000 = 25%

Profit of 60,000
Maria: 60,000 x 75% = 45,000
Christina: 60,000 x 25% = 15,000