Cable and Jones are considering forming a partnership whereby profits will be allocated through the use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and total bonuses. Cable will receive a salary of $30,000 and a 10% bonus. Jones has the option of receiving a salary of $40,000 and a 10% bonus or simply receiving a salary of $52,000.
Required:
Determine the level of income that would be necessary so that Jones would be indifferent to the profit-sharing option selected.

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The Answer of Cable and Jones are considering forming a partnership whereby profits will be allocated through the use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and total bonuses. Cable will receive a salary of $30,000 and a 10% bonus. Jones has the option of receiving a salary of $40,000 and a 10% bonus or simply receiving a salary of $52,000.
Required:
Determine the level of income that would be necessary so that Jones would be indifferent to the profit-sharing option selected.

Cable and Jones Are Considering Forming a Partnership Whereby Profits