Question

Caren held 260 of the shares for herself and sold the rest in equal amounts to six investors. How many shares does each investor own? If the business fails and leaves $65,000 in debt, for how much would each investor be liable

Answer 1

40 shares each and $3,000 each

Explanation:

The computation is shown below:

For the number of shares

Since there are total of 500 shares out of which 260 shares are held by Caren so the remaining shares left is

= 500 shares - 260 shares

= 240 shares

And, there are 6 investors

So the number of shares owned by each investor is

`= (240)/(6)`

= 40 shares

Now the value of the shares held by each inventory is

`= 40 shares * \$75`

= $3,000

Total debt is $65,000

So, the liability per share is

`= (\$65,000)/(500)`

= $130

And each investor holds 40 shares

So, each investor is liable for

`= \$130 * 40\ shares`

= $5,200

As we can see that the value of the shares is less than the amount liable by each investor

So each investor is liable for $3,000

And, the liability of Caren is

`= 260\ shares * \$75`

= $19,500