How could Paul and Mary Ann determine the return on their investment after their first year of Business? Assume that Paul and Mary Ann can borrow the remaining $20,000 needed to finance the purchase when answering this question
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Answer:
OwnershipPaul Bonanza and Mary Ann Boone are lifelong friends and have decided to go into business.They are not sure what form of business ownership and control to use. Paul would like to investhis savings of $25,000, but he does not want to take an active role in managing the day-to-dayoperations of the business. Mary Ann is a self-starter, enjoys cooking and baking, and has a vastnumber of pizza recipes. An existing pizza business is for sale for $50,000. Paul and Mary Annboth like the idea of investing in a business. Mary Ann has $5,000 she would like to contributeand believes that buying an existing business has certain advantages. She likes the idea that Paulwill not be an active owner and that she will have full control of the pizza operation.