A, B and C enter into a partnership. They invest Rs. 40,000, Rs. 80,000 and…
2026
A, B and C enter into a partnership. They invest Rs. 40,000, Rs. 80,000 and Rs. 1,20,000 respectively. At the end of the first year, B withdraws Rs. 40,000, while at the end of the second year, C withdraws Rs. 80,000. In what ratio will the profit be shared at the end of 3 years?
- A.
2 : 3 : 5
- B.
3 : 4 : 7
- C.
5 : 6 : 4
- D.
1 : 3 : 5
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Correct answer: B
Method: use time-weighted capital (capital × time period in years) for each partner.
A: 40,000 invested for 3 years → 40,000 × 3 = 120,000
B: 80,000 for the first year, then 40,000 for the next two years → 80,000 × 1 + 40,000 × 2 = 80,000 + 80,000 = 160,000
C: 120,000 for the first two years, then 40,000 for the third year → 120,000 × 2 + 40,000 × 1 = 240,000 + 40,000 = 280,000
Now form the ratio of time-weighted capitals: 120,000 : 160,000 : 280,000.
Simplify by dividing each term by 40,000:
120,000 ÷ 40,000 = 3
160,000 ÷ 40,000 = 4
280,000 ÷ 40,000 = 7
Final profit-sharing ratio: 3 : 4 : 7