0

Partner A borrows 40000 and invests in business. Partner B borrows 15000 and invests in same business. The business didnt go through. Both Parties invested a total of 55 000. One partner invested more than other. He demands from partner B to share losses equally. Since Partner A invested more, he asks Partner B to reimburs him so the losses are shared 50:50.

How much partner B owes Partner A based on amount invested. What is the formula for calculation ?

zizu 112233
  • 1
  • 1
  • Step 1: Name your variables! (What do you already know? What are you trying to figure out?) Feel free to draw a picture. Step 2: How can you use what you already know to figure out what you want to find out? Write down a formula that you might use. Step 3: Take a shot at it. Step 4: Check your results. Go back to step 2 or 3 if necessary. Step 5: If you're stuck somewhere in steps 2-4, post your efforts here. – David Diaz Sep 22 '20 at 13:15
  • This isn't clear at all. Why shouldn't $B's$ losses be capped at the $15,000$ investment? What rule is to be followed? – lulu Sep 22 '20 at 13:15
  • Both Parties invested a total of 55 000. One partner invested more than other. He demands from partner B to share losses equally. Since Partner A invested more, he asks Partner B to reimburs him so the losses are shared 50:50. How to calculate how much should partner B pay to Partner A. – zizu 112233 Sep 22 '20 at 13:18
  • Please edit your post to include all the information. There's nothing in what you wrote that suggests that losses should be split equally. – lulu Sep 22 '20 at 13:20
  • In any case: if the total loss is $X$, then both parties need to put in $\frac X2$. If, say, $\frac X2$ turned out to be $30000$ then $B$ would have to put in another $15000$, and so on. – lulu Sep 22 '20 at 13:22
  • I think it's very unlikely that your edit reflects the question author's intent. They wouldn't share profits 50-50, they would share them in proportion to their ownership stakes. – David Diaz Sep 22 '20 at 13:23
  • agreed. Partners would not share profits 50:50 but they would share them based on the ownership stakes. But the losses would be shared equally 50:50. – zizu 112233 Sep 22 '20 at 13:25
  • That's extremely unlikely. Nobody would ever take that deal. I think you have misunderstood the problem. – lulu Sep 22 '20 at 13:29
  • @lulu I don't think you are supposed to ignore the loss of the original investment. I think it means that Partner B pays the first 25,000 of the amount owing, and debts in excess of $25,000$ are shared equally. – saulspatz Sep 22 '20 at 13:29
  • Ok let me rephrase it differently. Partner A invested 72% of the total amount. (40000/55000100). Partner B invested 28% (15000/55000100). How much the partner B has to pay to partner A to share losses 50:50 of the original investment of 55 000. Ignore the likelihood. – zizu 112233 Sep 22 '20 at 13:33
  • @saulspatz No...I didn't ignore that. If, as in my scenario, the total loss was $X=60,000$ then each of $A,B$ would be responsible for $\frac X2=30000$. Thus, $B$ should pay in $15000$ more, and $A$ should take out $10,000$. – lulu Sep 22 '20 at 13:34
  • @lulu Right. I misread your comment. Sorry. – saulspatz Sep 22 '20 at 13:35
  • 1
    @lulu i think you are right. If i understood you correctly 55 000 / 2 = 27 500. Partner B invested 15 000. So he needs to pay remainder of 12 500 (27 500 - 15 000). Does this make sense ? – zizu 112233 Sep 22 '20 at 13:40
  • 1
    Yes, that is correct. And that money is paid out to $A$. And I trust that $B$ will never again do any business with $A$. – lulu Sep 22 '20 at 13:42
  • correct on both points. :):) Thanks – zizu 112233 Sep 22 '20 at 13:43

0 Answers0