Alex and Blake launch a joint tech venture by contributing $10,000 and $15,000, respectively. After 3 months, Alex reduces his capital by withdrawing 20% of his initial contribution, while Charlie joins the project by investing an amount equal to 40% of Blake's initial contribution. If the enterprise earns a total net profit of $112,000 at the end of one year, what is the combined share of profit earned by Alex and Charlie?
Correct Answer :
$52,000
Solution :
The correct answer is $52,000.
To find the combined share of profit earned by Alex and Charlie, we calculate the equivalent monthly investment (Capital × Time in months) for each partner over the 1-year period (12 months).
1. Alex's Total Investment:
Alex begins with an initial capital of $10,000 for the first 3 months.
After 3 months, he withdraws 20% of his initial contribution:
His remaining capital for the remaining 9 months is:
Total equivalent monthly investment for Alex:
2. Blake's Total Investment:
Blake keeps his initial contribution of $15,000 unchanged for the entire 12 months.
Total equivalent monthly investment for Blake:
3. Charlie's Total Investment:
Charlie joins after 3 months, so his investment lasts for 9 months.
His capital contribution is 40% of Blake's initial contribution:
Total equivalent monthly investment for Charlie:
4. Profit Sharing Ratio:
The ratio of profit distribution among Alex, Blake, and Charlie is proportional to their total equivalent investments:
Dividing all terms by 6,000 simplifies the ratio to:
Total ratio parts:
5. Combined Profit Share of Alex and Charlie:
The enterprise earned a total net profit of $112,000.
The combined ratio parts belonging to Alex and Charlie are:
Therefore, their combined profit share is:
The combined share of profit earned by Alex and Charlie is $52,000.
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