Lance, Neil, and Ed are starting a partnership and have contributed $100,000, $200,000, and $150,000, respectively. Lance plans to work full-time while Neil and Ed plan to work part-time. Which of the following plans would be the most equitable?

1. A fixed ratio of 50% to Lance and 25% each to Neil and Ed.

2. Interest on capital balances with the remainder split according to a 2:1:1 ratio for Lance, Neil, and Ed, respectively.

3. Interest on capital balances with the remainder split equally.

4. Salaries of $90,000 to Lance and $45,000 to Neil and Ed with the remainder split equally.

Question

04-04-2025
Business

High School

We appreciate your visit to Lance Neil and Ed are starting a partnership and have contributed 100 000 200 000 and 150 000 respectively Lance plans to work full time. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

Lance, Neil, and Ed are starting a partnership and have contributed $100,000, $200,000, and $150,000, respectively. Lance plans to work full-time while Neil and Ed plan to work part-time. Which of the following plans would be the most equitable?

1. A fixed ratio of 50% to Lance and 25% each to Neil and Ed.

2. Interest on capital balances with the remainder split according to a 2:1:1 ratio for Lance, Neil, and Ed, respectively.

3. Interest on capital balances with the remainder split equally.

4. Salaries of $90,000 to Lance and $45,000 to Neil and Ed with the remainder split equally.

Answer :

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nazmalik855 nazmalik855 · Answer 1 · 2024-03-26T18:36:58-04:00

Option 4 - salaries of $90,000 to Lance and $45,000 to Neil and Ed with the remainder split equally would be the most equitable plan.

Option 4, which involves providing salaries to Lance, Neil, and Ed with the remainder split equally, would be the most equitable plan for their partnership. By allocating salaries based on their respective contributions, Lance would receive a salary of $90,000, while Neil and Ed would receive $45,000 each. This allocation recognizes Lance's full-time commitment and compensates him accordingly, while also acknowledging the part-time involvement of Neil and Ed.

This plan ensures fairness by directly linking compensation to individual efforts and investments. Lance, who has contributed $100,000, receives a higher salary than Neil and Ed due to his larger investment. At the same time, Neil and Ed, with contributions of $200,000 and $150,000 respectively, are appropriately compensated for their involvement.

Splitting the remainder equally among the partners further promotes equity by considering their shared responsibilities and interests. This approach acknowledges the equal partnership between the three individuals, regardless of their varying contributions and workloads.

In summary, option 4 strikes a balance between recognizing individual investments and efforts while maintaining equity among the partners by providing salaries proportional to their contributions and splitting the remaining profits equally.

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