Three partners, Dev, Esha, and Farhan, launch a boutique cafe by contributing initial capital of $15,000, $25,000, and $40,000 respectively. If their business yields a total net profit of $96,000 at the end of the first year, how much profit will Esha receive based on their investment ratio?
Correct Answer :
$30,000
Solution :
The correct option is $30,000.
Step-by-step explanation:
Step 1: Determine the investment ratio of the partners.
Dev, Esha, and Farhan contributed initial capital of $15,000, $25,000, and $40,000 respectively.
The ratio of their investments is:
Dividing each value by 5,000 simplifies the ratio to its lowest terms:
Step 2: Calculate total ratio parts.
Sum the individual ratio components to get the total parts:
Step 3: Calculate Esha's share of the net profit.
The total net profit at the end of the year is $96,000.
Esha's share corresponds to 5 out of 16 total parts of the profit:
Dividing $96,000 by 16 gives the value of one part:
Multiplying by Esha's 5 parts:
Therefore, Esha will receive $30,000 based on their investment ratio.
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