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Patel and Rao decide to form a partnership. Patel contributes $250,000 in cash. Rao contributes buildings and equipment with a fair market value of $500,000, subject to a mortgage of $100,000, which the partnership assumes. Assume the partners specify an agreed-upon percentage in the initial partner capital, as follows: 50% to Patel, and 50% to Rao. If the bonus approach to partnership formation is used, Rao's initial capital balance will be:
a. $400,000
b. $250,000
c. $325,000
d. $375,000

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