Paul invests $10,000 cash in an equipment leasing activity for a 15% ownership share in the business.The remaining 85% owner is Amanda.Amanda contributes $10,000 and personally borrows $75,000 that she also invests in the business.What are the at-risk amounts for Paul and Amanda?
A) Option a
B) Option b
C) Option c
D) Option d

Question

Paul invests $10,000 cash in an equipment leasing activity for a 15% ownership share in the business.The remaining 85% owner is Amanda.Amanda contributes $10,000 and personally borrows $75,000 that she also invests in the business.What are the at-risk amounts for Paul and Amanda? 
A) Option a 
B) Option b 
C) Option c 
D) Option d

Quizplus · Accepted Answer

The at-risk amount for Paul is $10,000, which is the amount of cash he invested. The at-risk amount for Amanda is $85,000, which is the total amount she personally borrowed ($75,000) and invested ($10,000) in the business. Therefore, the total at-risk amount for the business is $95,000 ($10,000 from Paul and $85,000 from Amanda). Option B is the only choice that correctly shows these amounts.

Paul Invests $10,000 Cash in an Equipment Leasing Activity for a 15