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You plan to invest $10,000 in a general partnership. There will be four other general partners, each contributing $10,000 . So, the total contributed by

You plan to invest $10,000 in a general partnership. There will be four other general partners, each contributing $10,000. So, the total contributed by the general partners is  $50,000 and each partner owns  20% of the partnership. The partnership plans to borrow  $250,000 from the bank. Therefore, the partnership will have a total of  $50,000+$250,000=$300,000 in cash to start its business. What is your largest potential loss from your investment in the partnership? In other words, how much would you lose if the  $300,000 is invested in an asset that immediately loses all of its value (i.e., the asset's value drops to  $0 )?

 

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