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How much is the minimum level of profit necessary

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Reference no: EM133012107

The partnership agreement of partners A, B and C stipulates the following:

  • A shall receive a salary of 4,000.
  • Interest of 10% shall be computed on the partners' capital contributions of 4,000, 10,000 and 20,000.
  • Balance is divided among the partners on a 2:3:5 ratio. However, C is guaranteed a minimum share of 4,000, inclusive of interest, if the partnership earns profit.

Problem 1: How much is the minimum level of profit necessary so that A shall receive a total of 5,000, inclusive of salary, interest and share in remaining profit, and C shall also receive his guaranteed minimum share?

Reference no: EM133012107

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