Calculate the Net Profit Generated by Toby Inc

question 54

Multiple Choice

Calculate the net profit generated by Toby Inc.for a return of 8.6% from sales of $240 million.

• A)$20.6 million
• B)$78.4 million
• C)$120 million
• D)$206 million
• E)$12.6 million

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Definitions:

Average Rate of Return

A financial ratio that represents the average annual profit of an investment compared to the initial investment cost, often used in capital budgeting to evaluate profitability.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments by calculating the rate of return at which the net present value of costs (cash outflows) equals the net present value of benefits (cash inflows).

Average Rate of Return

A financial ratio used to measure the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.