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6 June, 23:38

Suppose you invest $20,000 of your own money in a business as a sole proprietor, and then borrow an additional $10,000 from a bank. Suppose the business fails. Which of the following describes your situation, and what is your total loss?

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  1. 7 June, 02:09
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    The correct answer is $30,000.

    Explanation:

    According to the scenario, the given data are as follows:

    Own investment = $20,000

    Debt from bank = $10,000

    As the business is sole proprietor, there is unlimited liability of the loss whether it is own investment or borrowed from a bank.

    So, the total loss can be calculated as:

    Total loss = Own investment + Debt from bank

    = $20,000 + $10,000

    = $30,000

    Hence, the total loss is $30,000.
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