Senjeni and Mkimwa entered into a business partnership in which they contributed Kshs. 120,000 and Ksh. 150,000 every year respectively. After one year, Kuku joined the business and contributed Kshs. 90,000.
a) Calculate the ratio of their investment after 3 years of business.
b) It was agreed that 30% of the profits after 3 years be used to cater for the cost of running the business, while the remaining would be shared proportionally. Calculate each persons share, if the profit made after three years was Kshs. 187,000.
c) If each of them invested their shares back in the business, find their new individual investments at the beginning of the fourth year.
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a) Senjeni's total investment after 3 years is 120,000 * 3 = Kshs. 360,000
Mkimwa's total investment after 3 years is 150,000 * 3 = Kshs. 450,000
Kuku's total investment after 3 years is 90,000 * 3 = Kshs. 270,000
The ratio of their investments after 3 years is 360,000 : 450,000 : 270,000, which simplifies to 4 : 5 : 3.
b) The total profit to be shared is 187,000 * 0.7 = Kshs. 130,900.
The total ratio for sharing the remaining profit is 4 + 5 + 3 = 12.
Senjeni's share is 4/12 * 130,900 = Kshs. 43,633.33
Mkimwa's share is 5/12 * 130,900 = Kshs. 54,527.77
Kuku's share is 3/12 * 130,900 = Kshs. 32,833.33
c) Senjeni's new individual investment at the beginning of the fourth year is 360,000 + 43,633.33 = Kshs. 403,633.33
Mkimwa's new individual investment at the beginning of the fourth year is 450,000 + 54,527.77 = Kshs. 504,527.77
Kuku's new individual investment at the beginning of the fourth year is 270,000 + 32,833.33 = Kshs. 302,833.33
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