You Have Been Provided the Following Information About Wert Inc

question 13

Multiple Choice

You have been provided the following information about Wert Inc.
$$\begin{array} { l l l } \text { (in thousands of dollars) } & 2005 & 2006 \\\text { Sales } & \$ 2,456 & \$ 3,778 \\\text { Net income } & \$ 172 & \$ 202 \\\text { Interest expense } & \$ 50 & \$ 55 \\\text { Total assets } & \$ 1,800 & \$ 1,950 \\\text { Tax rate } & 35 \% & 35 \%\end{array}$$
Return on assets for 2006 is:

• A)13.71%.
• B)12.68%.
• C)10.77%.
• D)13.21%.

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Definitions:

Annual Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business during a given fiscal year.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project, calculated as the difference between the present value of cash inflows and outflows over a period of time.

Yearly Cash Inflows

The total amount of money received by a company over a year, from various sources including sales, investments, and financing.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of a retirement strategy.