Question
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\( A B \) and Peter bought a house for R575000 as an investment. AB payed R245000 and Peter payed the rest. They sold the house 5 years later and made a profit of R234500.

Ask by Tucker Mann. in South Africa
Mar 11,2025

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Answer

AB received approximately R99,917.39, and Peter received approximately R134,582.61 from the profit.

Solution

1. The total purchase price of the house is \[ 575\,000. \] 2. AB’s contribution is \[ 245\,000, \] so Peter’s contribution is \[ 575\,000 - 245\,000 = 330\,000. \] 3. Since the profit is to be shared in proportion to their initial investments, the ratio for AB is \[ \frac{245\,000}{575\,000} = \frac{49}{115}, \] and for Peter it is \[ \frac{330\,000}{575\,000} = \frac{66}{115}. \] 4. The total profit made on the sale of the house is \[ 234\,500. \] 5. AB’s share of the profit is given by \[ \text{Profit}_{\text{AB}} = \frac{49}{115} \times 234\,500. \] To simplify, note that \[ \frac{234\,500}{115} = \frac{234\,500 \div 5}{115 \div 5} = \frac{46\,900}{23}. \] Thus, \[ \text{Profit}_{\text{AB}} = \frac{46\,900 \times 49}{23}. \] When calculated, this is approximately \[ 99\,917.39. \] 6. Similarly, Peter’s share of the profit is \[ \text{Profit}_{\text{Peter}} = \frac{66}{115} \times 234\,500 = 234\,500 - 99\,917.39 \approx 134\,582.61. \] Therefore, AB received approximately \[ R99\,917.39, \] and Peter received approximately \[ R134\,582.61 \] from the profit.

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Beyond the Answer

Did you know that the value of real estate can fluctuate dramatically over time due to market conditions, economic factors, and even neighborhood developments? When AB and Peter decided to sell their house after 5 years, they not only recouped their initial investment but also earned a profit that suggests they picked a good time to enter the real estate market! To break down the numbers, let’s see the total amount Peter paid for the house—R575,000 minus AB's R245,000 means Peter forked out R330,000. With a profit of R234,500 on their total cost of R575,000, Peter and AB can calculate their return on investment (ROI) to see just how well their venture paid off, making sure to consider other costs like maintenance and taxes too!

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