Margaret and Leah have invested in a small business venture together.Their initial capital investment totalled $15,000,with Margaret putting up $10,000 and Leah supplying $5,000.In their first year they net $21,000 profit.Which of the following distributions of their profits is equitable?

Question

Quizplus · Accepted Answer

Margaret and Leah should split the profits in proportion to their initial investments. Margaret invested twice as much as Leah ($10,000 vs. $5,000), so she should receive twice the profit share. Splitting the $21,000 profit in the same 2:1 ratio gives Margaret $14,000 and Leah $7,000.

Margaret and Leah Have Invested in a Small Business Venture