A, B and C enter into a partnership. They invest Rs. 40,000, Rs. 80,000 and Rs. 1,20,000 respectively. At the end of the first year, B withdraws Rs. 40,000, while at the end of the second year, C withdraws Rs. 80,000. In what ratio will the profit be shared at the end of 3 years?
Correct answer: D. 3: 4 : 7
- A. 2 : 3 : 4
- B. 3 : 2 : 4
- C. 3: 2 : 1
- D. 3: 4 : 7
Explanation
Profit is shared according to capital multiplied by the time invested. The capital-time products are A: Rs. 40,000 x 36 months = 1,440,000 Rs.-months, B: Rs. 80,000 x 12 months + Rs. 40,000 x 24 months = 1,920,000 Rs.-months, and C: Rs. 120,000 x 24 months + Rs. 40,000 x 12 months = 3,360,000 Rs.-months. Dividing by 480,000 Rs.-months gives 3 : 4 : 7. A student may choose 2 : 3 : 4 by using only the final capitals and ignoring the different investment periods.
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