Neil Morrison Has Just Invested $130,000 in a Restaurant

question 138

Multiple Choice

Neil Morrison has just invested $130,000 in a restaurant.He expects to receive income of $24,000 a year, and to have the investment for 8 years.What is the accounting rate of return?

• A) 5.60%
• B) 18.46%
• C) 14.52%
• D) 12.41%
• E) 4.50%

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Definitions:

Continuous Access

Uninterrupted availability or entry to a service, resource, or facility over time.

Direct Cross-Subsidies

Financial strategy where revenue from one product or service is used to support another product or service within the same organization.

Upfront Cost

Initial investment required before starting a project, service, or acquiring a product, often referred to in financial decisions.

Franchising Revenue Model

A business strategy where a company grants third parties the rights to operate using its brand, system, and ongoing support, in exchange for a fee or a percentage of the revenue.