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Jerry Graves and Bonnie Moss decide to form a partnership. Graves will contribute $300,000 to the partnership and Moss will contribute $500,000. Graves will be
Jerry Graves and Bonnie Moss decide to form a partnership. Graves will contribute $300,000 to the partnership and Moss will contribute $500,000. Graves will be responsible for running the partnership's day-to-day operations, which are anticipated to require about 40 hours per week at a rate of $150 per hour. In contrast, Moss will not work for the partnership. Consider a year to be 52 weeks. If the monthly income of the partnership is estimated to be $150,000 per month, decide which of the following methods is more beneficial to Graves and which one to Moss in terms of their shares of the annual income. Method one: Paying annual salary allowance for Graves, interest on their capital balances at the rate
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