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In what ratio should the profit be divided if M, N, O invests capital in ratio 2:3:5 and their timing of their investments are in the ratio 4:5:6.

Correct answer: A. 8:15:30

  • A. 8:15:30
  • B. 5:18:28
  • C. 4:5:6
  • D. 2:3:5

Explanation

Profit is divided according to capital multiplied by investment time. Thus the ratio is (2 × 4):(3 × 5):(5 × 6) = 8:15:30. The likely trap is option d, 2:3:5, which uses only the capital ratio and ignores how long each investment remains in the business.

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