Question

You form a company with two other partners. You put in $5,000, and they each put in $3,000. You all get ownership proportional to the capital you put in. The company makes $20,000 in the first year and distributes profits in proportion to each partners ownership share. How much do you get?

a) $5,000.00
b) $9,000.00
c) $9,090.90
d) $12,237,85

Answer 1

option c) $9,090.90

Explanation:

step 1

Find out your percentage of distribution of profits in fraction form

Divide your investment by total investment

`(5,000)/(5,000+3,000+3,000)=(5,000)/(11,000)=(5)/(11)`

step 2

To find out how much you get, multiply your percentage of distribution by the profits

so

`(5)/(11) (20,000)=\$9,090.90`