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Profit, Loss and Discount
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?
Correct answer: B
Explanation and memory cue
The profit sharing ratio in a partnership depends on the product of the capital invested and the time for which it is invested. Here, A invests Rs. 40,000 for 3 years, so the product is 40,000 × 3 = 120,000. B invests Rs. 80,000 for 1 year and then Rs. 40,000 for 2 years (after withdrawing Rs. 40,000 at the end of the first year), so the product is (80,000 × 1) + (40,000 × 2) = 80,000 + 80,000 = 160,000. C invests Rs. 1,20,000 for 2 years and then Rs. 40,000 for 1 year (after withdrawing Rs. 80,000 at the end of the second year), so the product is (1,20,000 × 2) + (40,000 × 1) = 240,000 + 40,000 = 280,000. The ratio of their investments by time is therefore 120,000 : 160,000 : 280,000, which simplifies to 12 : 16 : 28, and further to 3 : 4 : 7. This matches option B, so the correct answer is B.