Valerie Wong and Samantha Wall are partners and together have equity of $150,000 in the partnership. Sarah wishes to become a partner with ¼ interest in the firm. If her investment reflects the cash paid, how much will she contribute to the partnership?

Question

Quizplus · Accepted Answer

Sarah wants to own 1/4 of the partnership, which means her equity will be worth 1/4 of the total equity of the partnership after she joins.

Let X be the amount she contributes to the partnership. Then, her equity after joining will be:

1/4 * (total equity + X)

We know that the total equity after she joins will be:

150,000 + X

So, we can set up the equation:

1/4 * (150,000 + X) = X

Multiplying both sides by 4:

150,000 + X = 4X

3X = 150,000

X = $50,000

Therefore, Sarah will need to contribute $50,000 to the partnership.

Valerie Wong and Samantha Wall Are Partners and Together Have