Question

Applying the interest allowance method, compute Taylor’s and Timmy’s share of net income if Taylor invested $200,000 and Timmy invested $800,000 at a 6% interest rate, with the remainder to be divided equally. Net income was $75,000.
A. Taylor $15,000; Timmy $60,000
B. Taylor $37,500; Timmy $37,500
C. Taylor $19,500; Timmy $55,500
D. None of the above

Answer 1

Any ideas on how to start?

Answer 2

no

Answer 3

What do you think the answer is?