Question

Four investors bought a real estate asset together and decided to divide the profits equally. Investor A invested $200,000; investor B invested $500,000; investor C invested $800,000; investor D invested $500,000. If the net profit for the first year was $1,000,000, investor A receives __?__ more than if the profits were divided in proportion to how much they invested.

Answer 1

Answer:

$150,000

Explanation:

If four investors bought a real estate asset together and decided to divide the profits equally.

Investor A invested $200,000;

investor B invested $500,000;

investor C invested $800,000;

investor D invested $500,000. If the net profit for the first year was $1,000,000, investor A receives $150,000 more than if the profits were divided in proportion to how much they invested.

If the profits were divided according to investment percentage he would have gotten 200,000 / (200,000 +500,000 + 800,000+500,000) x $1m = $100,000.

However if profits are shared equally he receives $1m / 4 investors = $250,000.

Therefore $250,000 - $100,000 = $150,000