Homework Answers
Average investment = (Cost of the building + Salvage value) / 2
= ($301,000 + $76,000) / 2
= $188,500
Net profit = Annual revenue - Annual expense
= $60,435 - $39,700
= $20,735
Annual rate of return = Net profit / Average investment
= $20,735 / $188,500
= 11%
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$60,640, with annual expenses (including depreciation) of $39,400.
At the end of 15 years the salon will have a salvage value of
$79,000.
Calculate the annual rate of return on the project.
Annual rate of return
%
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Bruno Corporation is involved in the business of injection
molding of plastics. It is considering the purchase of a new
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requires a 10% rate of return on all new investments. Click here to
view PV table.
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