Your parents heard about the success of your business and they want to help you out. Suppose they want to give you an additional $300, you start with $10,000. However, there’s a catch. If you make more than $600 additional profit, you have to give them 10% of your earnings above $600. For example, if you have earned $650, then you owe 10% of $50, or $5, to your parents.

Question

Your parents heard about the success of your business and they want to help you out. Suppose they want to give you an additional $300, you start with $10,000. However, there’s a catch. If you make more than $600 additional profit, you have to give them 10% of your earnings above $600. For example, if you have earned $650, then you owe 10% of $50, or $5, to your parents.

Will you have to pay your parents, if so, determine how much you will owe your parents

Answer 1

To determine if you will have to pay your parents and how much you will owe them, we need to calculate the additional profit you make with the extra $300 and compare it to the threshold of $600.

Starting with $10,000 and receiving an additional $300, your total funds would amount to $10,300.

Additional profit = Total funds - Initial amount
Additional profit = $10,300 - $10,000
Additional profit = $300

Since the additional profit is exactly $300, which is less than the $600 threshold, you will not have to pay anything to your parents.