Question

The LMC Partnership has 3 partners and is concerned about what would happen to their $300,000 business if one of the partners should die. If they consider a buy-sell agreement, then each partner would have to buy a policy in the amount of $__________ on the other partners.

Answer 1

Answer:

$50,000

Explanation:

Since the partnership is valued at $300,000, then each partner's stake = $300,000 / 3 = $100,000

that means that each partner must purchase 2 policies (one for each of the other partners) that covers his/her stake = $100,000 / 2 policies = $50,000 per policy