Two partners A and B start a business by investing Rs. 4000 and Rs. 1500 respectively. What will the ratio of their profits at the end of the year? Options 8:3 9:16 5:8 8:9
Question
Two partners A and B start a business by investing Rs. 4000 and Rs. 1500 respectively. What will the ratio of their profits at the end of the year?
Options 8:3
9:16
5:8
8:9
Solution
The profit share of partners in a business is directly proportional to their investment and the time period for which they invested in the business.
In this case, both partners A and B are investing for the same time period i.e., one year. So, the ratio of their profits will be the same as the ratio of their investments.
Investment by A = Rs. 4000 Investment by B = Rs. 1500
So, the ratio of their investments (and hence profits) = Investment by A : Investment by B = 4000 : 1500
We can simplify this ratio by dividing both numbers by their greatest common divisor, which is 500.
So, the simplified ratio = 4000/500 : 1500/500 = 8 : 3
Therefore, the ratio of their profits at the end of the year will be 8:3. So, the correct option is 8:3.
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